Greece can repay its debt without restructuring, BoG

Greece must surpass its fiscal targets and reduce the size of its public sector, George Provopoulos, Bank of Greece’s governor said on Friday. In an interview with Market News, the central banker said that if Greece managed to achieve commitments included in the memorandum, then the EU and the IMF will approve the release of the next tranche of a loan from a support mechanism. Commenting on the government’s privatization programme, Provopoulos said it was ambitious and a large-scale privatization programme was very significant for the country, in its effort to exit the current crisis. He said that if such a programme was effectively implemented it could drastically cut public debt and release the country’s growth potential, convincing markets that Greece can make it. The implementation of a 50-bln-euro programme could reduce the debt by 22 pct of GDP and even more, as it could support growth and attract significant foreign investments. With this program we will sent a strong message to markets that Greece is changing, Provopoulos noted.

He underlined that Greece must surpass its fiscal targets, reduce the size of the public sector, boost competitiveness and combat tax evasion. He reiterated that talk over a debt restructuring was harming the country and stressed that Greece can repay its debt without any restructuring if it adheres to its consolidation programme.

Provopoulos said Greek banks enjoyed strong capital adequacy rates, stronger than the Eurozone’s average, but they were hit by a fiscal crisis. The central banker urged commercial banks to strengthen their balance sheets and noted that mergers and strategic alliances will come soon. Commenting on speculation that Greece could exit the euro, Provopoulos said: “I find it completely ridiculous”.

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