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Governor of the Bank of Greece George Provopoulos said that the local economy has decisively changed its course during the last year and this reflects positively on the country’s macroeconomic indicators.

“The progress of reforms in the Greek economy reflects the government’s determination to implement the recovery programme of the country,” he told financiers and politicians this week. It is clear that the peak of the financial turmoil has already passed; therefore there are specific improvements in the economic climate. Share prices on the stock exchange are twice as high compared to last year, the difference in the yield on Greek bonds over German bunds fell by 2,500 points, while deposits increased by 12%. 

The banks’ dependence on the European system fell by almost 35% and the budget deficit will be closer to zero at the end of this year.

“The benefits of the recovery programme not only had a wholesome effect for the restoration of confidence in the country and improvement of competitiveness, but reduced macroeconomic imbalances,” said Provopoulos. He stressed that thanks to the efforts that Greece is making the country is continuing to receive financial aid from Europe and the International Monetary Fund. It is believed that after the recapitalisation process, banks will be able to begin fulfilling their genuine role – financing of the real economy.

Regarding the state of the Eurozone, Provopoulos said there are two main factors that will support the economic recovery. One is that, in parallel with the Greek reform programme, reforms are underway in other European countries as well, which are working both for their national and the European economic stability. A second important factor is that leaders of the euro area are continuing to work for the synchronisation of activities in the Eurozone. A single model of economic management and building of strong safeguards against financial imbalances in the system is currently being developed.

The governor of the Bank of Greece was adamant that since the recovery programme is continuing then the country will be able to reach a primary budget deficit in 2014. The word GRECOVERY is currently replacing the word GREXIT, Provopoulos said and added: “As usual, markets are right, but a little late.”

The same opinion is shared by Finance Minister Yiannis Stournaras who defined eight conditions for the 

end of the recession and return to growth. The first and most important one remains the political stability in the country, which seems to have been reached after the second early parliamentary elections last year, followed by the recovery of the banks’ balance sheets, which is currently happening. They need to increase lending to the real business, so that the production machine can be triggered.

According to Stournaras, an important condition includes the improvement of the quality of services in the public sector. “We should not just reduce the number of civil servants, but improve their quality. There are excellent public servants in the 35 to 45 age group who should be encouraged by removing bureaucratic obstacles.” The Finance Minister ranked fourth the effective use of EU funds. For the period 2014 - 2020, Greece will have 44 billion euro in subsidies in order to support the development process and opening of new jobs.

The government’s plans also include the improvement of structural competitiveness. Objectives have already been met, taking into account the fact that for the period 2013 - 2020 labour costs had to be reduced by 20%, and today their actual reduction is 35%. “We have already surpassed the target by 15% for the total volume of the economy,” said the Minister. Competitiveness will be improved with market and occupation liberalisation and the removal of the majority of bureaucratic barriers to businesses.

The last two conditions for the return to economic growth are associated with the removal of distortions in the energy market and radical simplification of the tax system. The National Electricity Company will be partially privatised which should break the state monopoly so far and change pricing.