‘Grecovery’ on the way, Provopoulos says

20:59 7/2/2014 - Πηγή: Matrix24

In his speech at the Forum of Monetary and Financial Institutions (OMFIF) in London on: “The Greek cirisis: from Grexit to Grecovery”, the Greek central banker said he expected the Greek economy to return to growth this year, although “initially with small steps”.

Provopoulos

said this optimistic estimate was based on three factors: first, structural reforms in the labor and product markets have significantly contributed towards progress in competitiveness, which in turn has improved exports. Second, regaining confidence in the Greek economy, boosting domestic consumption and investments. Third, fiscal absorption will be significantly reduced compared with previous years.

The central banker also underlined the significant progress made by the Greek economy in dealing with current account deficit and promoting reforms, necessary for its transformation into an export-led economy.

Provopoulos also analyzed the central bank’s actions to safeguard financial stability, a recapitalization and reorganization of the banking sector. “A restructuring of the Greek banking system was huge,” he said, adding that “as the crisis grew, the Bank of Greece took measures to safeguard the stability of the system: safeguarding liquidity and restoring capital adequacy”.

The central banker said that a new code of conduct between banks and borrowers will be introduced from 2015. The aim of this code was to ensure the maximum possible repayment of loans in delay and easing pressure on borrowers who have reduced ability of repaying their debts. Improving management of non-performing loans will lower capital requirements, releasing funds to fund a new growth model in the Greek economy, Provopoulos noted.

Commenting on the current actions of the bank, he said: “We are now implementing the second phase of our strategy, which includes a new business model of bank operation, which will allow banks to repay state support and fund the recovery of the Greek economy. After acquiring the healthy portfolios of restructured banks, or completing merger deals, Greek banks are now exploiting synergies and scale economies, boosting their efficiency. Additionally, they turn their focus again to their main activities, by selling non-core assets and restructuring their networks and activities abroad”.

Provopoulos noted that the yield spread between the 10-year Greek and German benchmark bonds have fallen by around 1,800 basis points since the peak of the crisis in mid-2012, to around 700 bps currently. The stock market index is around 85 pct up, bank deposits grew by 9.0 pct, while Greek banks have cut their dependence from the Eurosystem by half. The economic sentiment index jumped to a five-year high, while the country’s twin deficits have turned into twin surpluses.

Around 150 top executives from investment firms, financial institutions and state investment funds attended the speech.

source: ΑΜΝΑ

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