Brussels, 26/02/2013 (Agence Europe) - The governor of the Central Bank of Greece, Giorgos Provopoulos, said on Monday 25 February that Greece would get its head above water in 2014 as long as the Greek programme was implemented. He was speaking as a group of experts from the troika of lenders (European Commission, European Central Bank and International Monetary Fund) began a new fact-finding mission in Athens. Provopoulos laid the emphasis on tackling tax evasion rather than cutting pay and tax hikes.
The economic forecasts issued by the Greek Central Bank are similar to those published on Friday by the European Commission (see EUROPE 10792). The bank expects the Greek economy to contract by 4.5% of GDP in 2013, but return to growth in 2014. He thinks growth will contract by 4.4% in 2013 with growth returning in 2014 (of the order of 0.6%).
“There is no doubt that 2013 will be a difficult year, chiefly because of the continuing recession and high unemployment. The continued implementation of Greece's programme is a precondition for the country's recovery”, said Provopoulos.
Greek GDP will shrink again this year - for the sixth year in a row, with the economy contracting by 20% since 2008. One in four adults will be unemployed in 2013 with unemployment remaining at around 27% this year and not falling to any great extent next year.
All the same, Provopoulos echoes the European Commission in calling for budget consolidation to continue. He said strict respect of objectives would ensure viable finances, put an end once and for all to the risk of having to leave the eurozone and would attract new investment and send a clear message that the worst is now over. The Commission has often repeated that the recommended strategy for dealing with the economic crisis must continue, despite the IMF admitting recently that the austerity policies would have a worse impact on the economy than expected by the financial experts. The Commission says the programme must continue at whatever cost, adding that the conditions have already been eased.
Provopoulos nuanced his position, however, calling on the government to end excess taxation and the slashing back of pay and to do more to actively prevent tax evasion in order to generate new income to deal with the public deficit.
The troika experts in Athens this week will be assessing implementation of the programme, paying particular attention to the Greek government's earmarking of 25,000 civil servants to join a “labour mobility” scheme this year. (EL/transl.fl)