ATHENS (MNI) – Bank of Greece Governor Georges Provopoulos said
Tuesday that additional austerity measures were not needed to meet this
year’s public deficit target, provided consolidation remains on track.

The central banker, who sits on the Governing Council of the ECB,
categorically ruled out restructuring the country’s debts and said he
was confident that major domestic banks would perform well in the stress
tests to be published in coming weeks.

“The data we already announced confirm that to date, for the first
half of the year, the deficit has been reduced by 42% compared to the
same period last year,” Provopoulos said in a television interview.
“This is very satisfactory.”

Asked about the likelihood of further austerity measures later this
year, he replied, I believe that there will be no such need, because we
will meet the deficit target for this year, which is 8.1% after 13.7%”
last year.

On the revenues side there is indeed a certain shortfall vs the
targets, but that should not scare us,” he argued. “There are taxation
measures that have been approved but have not come to fruition yet. The
growth rate of revenues rate will improve.

I am categorically saying that no new measures will be needed” as
long as progress continues at the current pace, he reiterated.

Regarding ongoing media reports about a possible debt
restructuring, Provopoulos said, This is a very bad discussion which
started when the country was hanging in the balance and was could not
borrow from the markets.”

“I repeat: it is a very bad discussion, because first, we dont
need to do it and [second] it would be very dramatic to even think about
it. I absolutely believe we will not need to come to that.

Asked about the state of the banking system and the stress tests
conducted by the central bank, the governor replied: Greek banks have
no problem; I firmly state that. All EU countries will publish their
stress test in the next 15 days.”

“We have the intention to announce the results of the larger banks,
which are the core of our banking system, and I believe that things will
go smoothly,” he added.

The past ten years were good years, which created euphoria and big
profits for the Greek banks,” he reminded. “This will not be repeated.
Profitability will be squeezed [as we are] in a more difficult
macroeconomic and financial environment.”

“There will be pressure for alliances and joining forces,” he
predicted. “I have talked to the banks and asked them to think about
their strategic future, given the circumstances, and proceed with the
necessary synergies that happen not only in Greece but around the
world.

Referring to the three-year salary freeze in the private sector the
government is pushing and currently negotiating with social partners,
the governor reminded that it was a condition agreed as part of the
EU-IMF financial support package.

Since the Parliament signed the agreement, which includes this
freeze, I have no say in it,” he said. “We must respect and implement
all measures. They will create a different country.

a_papamiltiadou@hotmail.com

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