A line of economists, bankers and journalists formed at the main entrance of the Greek central Bank at noon on Tuesday. It was minutes before its Governor George Provopoulos was due to present its annual report on the economic situation of Greece. Among the visitors were the Minister of Finance Philippos Sachinidis, the economic adviser to Prime Minister Gikas Hardouvelis, the president of the National Bank of Greece Vassilis Rapanos, the head of Eurobank EFG Dimitris Nanopoulos, the head of the Foundation for Economic and Industrial Research Yiannis Stournaras and many other representatives of the financial circles of Greece.
Each year in spring, Provopoulos presents the level of basic macroeconomic indicators for the past year and the Bank of Greece estimates the economic development for the next 12 months. This year's presentation of the report by Provopoulos sounded like a déjà-vu or like an echo of what was said in 2010 and 2011.
Reforms in the administrative system, reducing bureaucracy, improving the business environment, restoring competitiveness and simplifying laws and procedures in the country. These were some of the immediate measures that Provopoulos again described as urgent. These measures should be the top priority of the government, which will be formed after the special parliamentary elections on 6 May this year.
For several years now, he has been drawing attention to the importance of reducing government spending in order for the government to fit it within its own means, but so far, no effective result has been achieved in this direction. The deficit for 2011 remained high - 9.8% of GDP and in 2012 it is expected to fall to 7.5% of GDP. "Both the fiscal and the external deficits remain high, implying that the country continues to live beyond its means, by relying on the financial support of its partners. Major structural weaknesses in the public sector still remain, even in cases where measures to eliminate them have been legislated," states the report of the Bank of Greece.
Last year the recession reached 6.9% and this year, it will be around 5%. Over 250 thousand people lost their jobs in 2011 and the trend for the near future remains negative. The worst was the fourth quarter of 2011, when foreign direct investment fell by 20%. He did not deny that the changes made so far are in the right direction, but stressed that they are not enough to get Greece out of the crisis. Besides reducing the red tape and facilitating the procedures in the state system, Provopoulos insists on accelerating the privatization programme in the country. This same programme, the serious delay of which was announced a year ago.
There is no easy way out of the crisis. Reforms must continue with determination, said Provopoulos. He did not fail to note that regardless of the election outcome, the country must continue its reforms by all means. Otherwise, Greece will go decades back - a warning that was made in the same hall exactly a year ago. "What is at stake is the choice between: An orderly, albeit painstaking, effort to reconstruct the economy within the euro area, with the support of our partners; or a disorderly economic and social regression, taking the country several decades back, and eventually driving it out of the euro area and the European Union."
Once again, there was a call to change the economic model. Reforms should focus on creating competitive products that are in demand in foreign markets and on eliminating non-competitive regulation of the domestic market. The Governor of the Bank of Greece could not help but address the issue of the financial system but did not examine it in detail. He repeated that the difficulties of banks are due to the macroeconomic crisis that was triggered by the political government. From 2008 until today, 70 billion euro in deposits have been withdrawn, which is almost one third of GDP and bad loans and debt haircut have made their existence even more difficult. Provopoulos stressed that the process of recapitalization with the help from the public sector and financing from Europe is in progress and once it is completed, banks will be more stable and more useful to the real economy.
Meanwhile, he said that it is necessary to seek ways to enhance cash inflows. One of those ways is to intensify privatization. It can bring up to 19 billion euro by 2015, which will not only have a direct impact on revenue, but will indirectly generate additional investment and new jobs. Like other business and financial experts, Provopoulos stressed that if the resources under the National Strategic Development Framework (ESPA) are also accelerated, the Greek economy will be able to "absorb" 15 billion euro. To this, the head of the Bank of Greece added the opportunities for loans from the European Investment Bank.
In conclusion, George Provopoulos said, "We all must assume the historical responsibility of making the choice - as a society, as a political system, as responsible citizens. The future of the country is today in our hands."
Whether another year will pass without Provopolos voice to be heard will become clear next spring and perhaps earlier.