Bank of Greece governor (BoG) Yannis Stournaras in an interview with Kathimerini newspaper on Sunday said that Greece’s progress is indisputable and warned the country not to backtrack on commitments to its lenders after it exits the last of its three bailouts, saying markets would abandon it.
He explained that the basic structure of the economy has started to change and has become more competitive, but Greece still has ‘a long way to go’ to fix imbalances in its economy and problems in the functioning of the state.
Stournaras said that while painful economic reforms have tackled issues such as the very large twin deficits, competitiveness in terms of unit labor costs, improved the corporate governance of banks and liberalized the labor market, major problems persist, like the high public debt, non-performing loans, high unemployment, the country’s brain-drain and bureaucracy.
He also warned the country not to backtrack on commitments to its lenders after it exits the last of its three bailouts, saying markets would abandon it. Any backpedalling could leave Greece facing major risks at a time when it would be particularly vulnerable to financial turbulence in neighboring Turkey, Italy and beyond, he added.
“If we backtrack on what we have agreed, now or in the future, the markets will abandon us and we will not be able to refinance maturing loans on sustainable-debt terms,” he told the paper.