BoG’s Stournaras: It is unthinkable for the parties to endanger Greece’s investment grade

The head of the Bank of Greece sent a message to parties, just days ahead of elections,saying that he considers it unimaginable that any party or parties that find themselves in the government of the country in the next four years would endanger the investment grade.

As Giannis Stournaras explained, Greece is very close to its return to the investment rating and as he emphasized this upgrade concerns us all, “as the multiplier effects will be huge for the entire economy for all citizens”.

The scenarios of international houses for the new government – The forecasts for the economy

At the same time, the governor of the Bank of Greece once again recommended fiscal discipline, underlining that the measures announced should not worsen competitiveness, either short-term or long-term, but should be measures that reduce national savings. With investment at 14% of GDP (up from 11%), Greece is far behind the Eurozone average of 24%. “At the same time, national savings must increase. That is, to reduce the public deficit a lot, to make a surplus, but also to increase national savings. We do not need measures that reduce national savings. It is not only the deficit of the public sector, it is also the deficit of the balance of current transactions”, Yannis Stournaras points out, worrying as he said about the measures announced by the parties.

Inflation and interest rates

Asked about interest rates during an interview on Naftemporiki TV, the head of the Bank of Greece replied that there might be one or two more hikes, which would depend on the data on the inflation front.

Giannis Stournaras warned that its de-escalation to pre-pandemic levels may take a long time to happen, since as he noted there are many who believe that the wave of accuracy may have a longer duration.

After all, as recalled, the European Central Bank has stated that it expects consumer prices to fall to its official target of 2% in 2025.

In closing, Yiannis Stournaras explained that there are two important challenges for the economy on the day after the elections.

“There should be a prudent economic policy in the fiscal sector, that is, let’s proceed with decisions in order to reach a primary surplus that ensures investment grade. To make the reforms that are required and that we have committed to in terms of the disbursements of the Recovery Fund, so as to increase the potential rate of growth – to go green, to go digital. And, above all, keep in mind the current account balance. We cannot want to increase investment from 14% of GDP to 22% – and that is very correct, but at the same time take measures that reduce national savings”.