BoG: Exit strategy from crisis unvelled

The Bank of Greece (BoG) recommended an "exit policy from the crisis", in its Interim Report on Monetary Policy 2011 tabled in parliament on Wednesday, setting out two national targets, economic growth at a faster pace and creation of budget surpluses at a higher rate than forecast, and warning that this is the last opportunity to reshape the economy. On the plus side, the report noted encouraging signs with respect to structural changes, indicating that in the midst of the crisis some underlying positive dynamics have been set in motion which, provided they continue, could lead to a significant restructuring of the economy over the medium term.amna According to the central bank's interim report, the Greek economy is going through a new, exceptionally critical phase, and the implementation of the necessary policies requires and strong and effective government and focused steps. A summary of the report released by the BoG said: The Greek economy is going through a new, exceptionally critical phase About a year ago, the Bank of Greece considered that the debt could be sustainable. The Bank based its assessment on (a) the full attainment of the fiscal targets that had been set -- indeed, the Bank strongly encouraged the overachievement of those targets, wherever possible -- and (b) a substantial improvement in competitiveness. In the event, however, the inter-related effects of an undershooting of the fiscal targets, delays in implementing structural reforms, and a sharper-than-expected decline in economic activity undercut earlier assessments about debt sustainability. The decision of the 26 October Euro Summit represents a milestone on the adjustment path of the Greek economy. The main aim of the agreement reached concerning Greece was to lighten the burden of government debt and its servicing costs, while the adoption of a new multiannual EU-IMF support programme for Greece is envisaged by the end of 2011

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