ECONOMY

Economy in need of reforms

The Bank of Greece, the country’s central bank, is expected to warn that the economy is at risk of entering a long period of stagnation unless bold reforms are implemented in its annual report due out on Wednesday. Bank of Greece Governor Giorgos Provopoulos is likely to say that reforms are needed to help narrow the budget deficit and reduce the public debt, the second highest in the eurozone. Reforms will be necessary in order to cut back spending in the public sector and reduce the budget deficit to zero by 2012, according to sources. Economy and Finance Minister Yiannis Papathanassiou recently admitted that the budget deficit in 2009 will exceed the government’s 3.7-percent of GDP estimate, but he did not give any further information. The central bank report will also call for changes to services and product markets in order to make the economy more competitive, sources added. According to a report by the World Bank, Greece is ranked 96th out of a total of 181 countries in an assessment of the competitiveness of economies. Albania, the Former Yugoslav Republic of Macedonia (FYROM), Montenegro and Kazakhstan all scored better than Greece. Provopoulos said last week that the growth of the Greek economy will most likely come to a halt this year. The European Commission sees the Greek economy expanding at an annual rate of 0.2 percent this year but is likely to revise downward its forecast to below zero in its Spring report due out in the first week of May.