Bank of Greece calls for faster structural reforms
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A Greek debt restructuring is "neither necessary nor desirable," the head of the central bank said on Monday as he called for faster structural reforms to keep up with the country's obligations.
"Such an option is neither necessary nor desirable," Bank of Greece governor George Provopoulos said in his annual report on the Greek economy.
"It is not necessary because we can meet our goals if we apply policies correctly. It is not desirable because it would have disastrous consequences on the access of the government and of businesses to international credit markets," Provopoulos said.
The central banker, a member of the board of the European Central Bank, said the recession-hit Greek economy was "on the edge" as structural reforms were still slow in relation to the country's rapidly-growing debt.
Greece's debt has exploded to 340 billion euros ($490 billion) and speculation is rife that the recession-hit eurozone member will seek a way to ease its repayments before long.
But the socialist government has repeatedly insisted that such a move would damage the country's efforts to repair investor confidence which has been strained ever since a scare over the accuracy of its fiscal statistics in 2009.
Greece's economy is caught in a tailspin as it labours to enforce a draconian austerity programme mandated by the EU and the International Monetary Fund in return for a 110-billion-euro ($159-billion) bailout loan in 2010.
Provopoulos forecast on Monday that the recession will drag on 2011, with output falling of at least three per cent, "without excluding a somewhat greater drop," he noted.
Unemployment — which has soared to levels unseen in a decade — will exceed 15 per cent, the central banker said. Inflation will fall compared to 2010 but will still be close near 3.25 per cent, Provopoulos said.
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