BoG Gov. Stournaras Cites Reasons for Greek Econ ‘Success Story’

Influential Greek central banker Yannis Stournaras on Thursday repeated his “success story” moniker to characterized the country’s economic recovery, speaking during an LSE event.

At the same time, the Bank of Greece (BoG) Governor also repeated his standing warning over deficiencies that must be addressed in order for the Greek economy to become competitive in the long term.

Stournaras, a former finance minister, said the recovery is validated beyond a doubt by the recent restoration of Greece’s credit rating to investment grade by most international rating firms.

“In fact, bond yield spreads and other parameters were compatible with the investment grade rating even before Greece’s official upgrade. In the mid-term, economic growth is expected to be significantly higher than the euro area average. Serious fiscal problems, debt sustainability as well as banks’ restructuring and recapitalization have been successfully addressed,” he added.

The “ingredients” of this “success story”, according to Stournaras, were the “painful internal fiscal and structural adjustments during the three adjustment (bailout) programs”, along with a strong volition to keep the country in the eurozone and generous debt refinancing with favorable terms extended by creditors.

He also cited substantial support from the EU’s Recovery and Resilience Fund (RRF), a previous waiver by the ECB of the minimum credit rating requirements for Greek government bonds, and finally, more orthodox fiscal, credit and structural policies in the country over the past few years.