Athens Macedonian News Agency: News in English, 16-02-10

Athens News Agency: News in English Directory - Previous Article - Next Article

From: The Athens News Agency at <http://www.ana.gr/>

CONTENTS

[01] Spending cuts better than tax increases, BoG governor Stournaras says‏

[01] Spending cuts better than tax increases, BoG governor Stournaras says‏

Speaking in Parliament, during a discussion on the bank's interim report on monetary policy for 2015 at the Economic Affairs Commission, Stournaras noted that both options lowered available income but the long-term result was worse when a tax increase policy was chosen compared with the implementation of spending cuts policy.

"No one wants pensions to be cut, but we must chose the size with the lowest cost for the society," the central banker said, adding that there was room to "look at the first pension, the second pension, supplementaries and lump sum payments," because as a society "we overprotect third age at the expense of younger generations".

Referring to privatisations, Stournaras said "we would be better off if the current and previous governments had implemented a privatisation programme faster" and stressed that it was feasible to raise their percentage as long as there was political will and noted that this would be a stronger tool than any development law. He added that according to existing surveys, tax cuts had a more positive impact on lowering unemployment compared with subsidies.

Stournaras made special mention of the necessity of exploiting state and church assets, while commenting on the financial impact of the migration issue, he said that countries such as Germany would benefit from the increase of an educated workforce, such as Syrian refugees, while transit countries like Greece would suffer the cost of rescue and creating infrastructure - in the case of Greece it was estimated at around 600 million euros annually. Commenting on a scenario of Greece leaving the Schengen Area, Stournaras said the cost of human and cargo transport for a country labeled as an international tourist destination, would be very big.

The Greek central banker said concluding the first review of the Greek economic programme, restoring confidence in the economy and the banking system and the return of deposits were preconditions for lifting capital controls in the country. He said that the cost from the imposition of capital controls was not necessary, but added "having the experience of Cyprus we took measures which limited the impact, which in the end were smaller than initial estimates".

Referring to non-performing loans, Stournaras said that the first home protection status in Greece was adequate and that fair use of non-performing loans was an opportunity for banks. Commenting on a recent plunge of prices in the Athens Stock Exchange, he said that this development has not yet affected the capital adequacy of Greek banks, "but this depends on the length of time that the share price decline will last".

He reiterated that political stability and social consensus were preconditions for economic recovery and sent a message to opposition political parties saying: "an agreement with partners has been voted, I do not accept that an agreement is voted in principle but prior actions are not voted".

Athens News Agency: News in English Directory - Previous Article - Next Article