BoG Gov. Stournaras: Greece enjoying strong recovery; public debt sustainable

Greece’s influential central banker appeared guardedly optimistic over the country’s continued full recovery and even future prospects, speaking just a couple of years after three successive bailouts and accompanying memorandums marked the worst post-war economic crisis.

In an interview with the German financial daily FAZ, Bank of Greece (BoG) Gov. Yannis Stournaras, himself an “old hand” in top positions during the country’s decade of economic turmoil – including as finance minister – said his central bank received more than 8,000 applications for 100 job spots announced. Some of the applicants, he noted, were well-paid executives at foreign investment banks, essentially insinuating a budding “brain gain” where “brain drain” once reigned.

Asked about Greece’s current fiscal policy – now more than two years into a pro-reform and center-right government led by Kyriakos Mitsotakis – he referred to “messages of recovery” being send to international markets and partners.

“The government is planning to repay, next month in fact, the last of teh loans received by the IMF as part of the last decade’s debt crisis. We’re talking about 1.9 billion euros, which, in reality, would have matured in 2024 as part of the 28 billion euros loaned (to Greece) by the IMF between 2010 and 2014,” he said, adding that another early repayment of 5.3 billion euros to Euro-zone members, who also extended loans to Greece during that period, was planned with the first quarter.

Nevertheless, it was reminded that Greece still remains the most indebted country in the EU, with a debt-to-GDP ratio above 200 percent in the first quarter of 2021. Exasperating the latter is the fact that the Covid-19 pandemic merely added to the fiscal burdens. At the same time, “favorable and flexible” conditions accompanied many of the loans extended in the three successive bailouts from 2010 to 2015.

“This is the other side of our ordeal. Yes, we fielded a harsh policy of austerity and negative growth for many years; we cut salaries and pensions, and we raised taxes. However, public debt was refinanced with very favorable terms. The average interest (on those loans) is 1.4 percent, significantly lower than another other country,” he qualified.
Finally, he forecast that at these rates, Greece’s public debt can be reduced by 3.5 percentage points on an annual basis.