BoG governor Stournaras: Greece needs debt relief

Greece needs debt relief because it will not regain access to markets in 2018 if its public debt is not considered sustainable, Bank of Greece governor Yannis Stournaras said on Monday, addressing the annual conference of the Greek Tourism Confederation. Greece should achieve growth rates of 2.7 pct of GDP in 2017, provided the second review of the Greek programme was concluded swiftly.

Stournaras noted an increase in non-performing loans in the tourism sectors, noting that they had reached 54.3 pct in the first half of 2016 and were thus significantly higher than the level for the economy as a whole (45.1 pct). The phenomenon should be investigated and dealt with, he said.

At the same time, he pointed to a number of promising signs indicating a gradual recovery in the economy in 2016, forecasting that this will continue in 2017 and 2018, provided that the reforms and privatisations agreed with the institutions are adopted and loans are disbursed promptly.

With respect to the tourism sector, Stournaras said it needed to adapt its growth model and seek to upgrade both the product and make it more ‘specialised’ to offset trends for lower tourism revenues in spite of increased numbers. This would mean an improvement of infrastructure, for which he urged exploitation of state property and settling outstanding issues relating to spatial planning to attract new investments.

Among others, the central banker called for a reduction in the cost of airplane travel to Greece, to make the tourism product more competitive, as well as improvements to regional airport, stronger competition between airlines, more emphasis on marinas and other marine tourism infrastructure and better port facilities to encourage cruise tourism.