I would like to thank the Economist for their honorary invitation to today’s insightful event.
Εvent which gives us the opportunity and the challenge to share some thoughts on the financial landscape in Greece and the Eurozone, after more than 2 years on crises, in the fields of health, energy and geopolitics.
These crises are shaping a much more unstable world, in which our governments are called upon to work together and develop timely, effective and farsighted policies.
Ladies and Gentlemen,
Amid these turbulent times, the Greek economy has demonstrated remarkable resilience and important achievements, as confirmed by all “stakeholders”.
This is based on the implementation of key reforms in 6 key areas, namely fiscal policies, social welfare, financial stability, labour and product markets, privatizations, as well as the modernization of public administration.
Over the last 3 years, despite the challenging circumstances, we have voted 333 bills in the Parliament.
Thus, we have achieved major economic goals.
I will mention just 5 of them:
1st. The economy is growing.
We achieved a V-shaped recovery in 2021, while the GDP figures – for the 1st quarter of the year – were very strong, 7% y-on-y, indicating that our current projections, of 3.1% growth in 2022, may eventually turn out to be quite prudent.
2nd. GDP composition positively changes.
While the share of non-tradeable services is declining, the share of investment and exports is increasing.
Indeed, gross fixed capital formation increased by 12.7% y-on-y in the 1st quarter of the year, while exports of goods and services increased by 9.6% over the same period.
3rd. Labour market developments have been positive.
Unemployment continues its decline, being at the lowest level since August 2010, labour inactivity falls, employment increases by double the size of inactivity reduction, while the reduction in the unemployment rate among women and youth is more pronounced than the reduction in the headline unemployment rate.
4th. The banking sector has made marked progress.
The NPL ratio has been reduced from 41% of total loans at the end of 2019, to 12% in March 2022.
5th. Public finances have resumed their improving trajectory.
Both the budget balance and public debt are recording a significant decline.
Indeed, public debt to GDP ratio declined by 13 percentage points in 2021, probably the strongest one-year reduction ever recorded in the history of the Eurozone.
We also expect further improvement of our public finances in 2022, with the primary deficit shrinking further to 2% of GDP, and the debt to GDP ratio falling by another – at least – 13 percentage points.
All these developments prove the effectiveness of the applied economic policy and the credibility of the Greek government.
As reflected, among others, in the multiple upgrades of the Greek sovereign from credit rating agencies, as well as the historic decision regarding the exit of the country from the enhanced surveillance mechanism.
However, we still face lingering uncertainty, significant challenges and downside risks related to energy prices and inflation, which require persistent reform efforts at the national level, as well as decisive solutions at the European level.
We are committed to continue implementing a prudent, reform-oriented economic policy agenda, based on 6 pillars:
1st Pillar: Providing one-off support measures, especially for the most vulnerable households and enterprises.
2nd Pillar: Following a credible fiscal path, mainly based on GDP expansion, with higher permanent tax revenues, enhanced by growth-friendly reduction on taxes and social security contributions.
Indeed, European Commission projects that Greece will present the highest primary surplus among all EU member-states in 2023.
3rd Pillar: Implementing a smart debt issuing strategy, based on low average annual gross financing needs, proactive liability management and regular market operations, so as to maintain substantial cash buffers.
4th Pillar: Enhancing liquidity in the real economy, through banks’ credit expansion, the development of the Loan Facility of the Recovery and Resilience Plan, as well as the implementation of the new insolvency framework, which is, truly, state-of-the-art.
5th Pillar: Utilizing public property through the implementation of the Asset Development Plan, as well as of structural reforms.
Indeed, we have completed a number of important reforms to digitalize public administration, to reorganize the pension administration, to simplify the framework for investment licensing, to provide a modern corporate governance regime, to establish tax incentives in order to boost research and innovation and to increase the size of firms.
6th Pillar: Rationally utilizing the available European funds.
The National Recovery and Resilience Plan, Greece 2.0, is in full swing.
To date, 230 planned projects and subprojects have been incorporated into the implementation phase, of total face value equal to 10.2 billion euros.
It is evident that, despite difficulties and international volatility, Greece has turned a page.
We will certainly continue to work hard, in order to overcome the difficulties and strengthen Greece and Europe as a whole.
