BoG Governor urges government to fulfill deal with creditors

BoG Governor urges government to fulfill deal with creditors

Athens, February 27, 2015/ Independent Balkan News Agency

By Lefteris Yallouros

Bank of Greece Governor Yannis Stournaras warned the government that a final agreement with the country’s creditors must be reached soon in order to avoid a setback to economic recovery.

Stournaras told the bank’s annual shareholder meeting that “we must pursue the negotiations in a spirit of cooperation and trust and promptly conclude a mutually beneficial final agreement with our partners (…) If we, on our part, adhere to our commitments, our partners in turn can be expected to reiterate their decision to consider further measures to alleviate Greece’s debt burden.”

“These reforms are much smaller in scope and would entail low cost compared with the huge changes made in recent year at a very high price for Greek society,” he said. “If we, on our part, adhere to our commitments, our partners in turn can be expected to reiterate their decision to consider further measures to alleviate Greece’s debt burden.”

The central bank chief also urged the government to review tax exemptions and favorable tax treatment – which he said could allow for a lowering of tax rates overall – as well as complete the privatization program.

Stournaras also referred to the banking system, stressing that an agreement with the eurozone must be fulfilled so that the European Central Bank would resume funding access for Greek banks. While Greek banks are well-capitalised, bad loans are still too many and liquidity has also suffered in the last few months, he added.

Meanwhile, earlier on Thursday, Minister of State for Coordinating Government Operations Alekos Flabouraris said Greece might delay payment to the International Monetary Fund if it cannot come up with the money to pay back EUR 1.6 bln next month. Athens might ask to delay this payment for two months, Flabouraris revealed. Analysts warn that if the government forfeits repayment, it will be considered a credit event, or default.