BoG: Continue to support workers |


Greece’s economy is at risk of a large number of bankruptcies of unsustainable companies following the coronavirus crisis, Bank of Greece Governor Yannis Stournaras warned on Tuesday in his annual report for 2020, noting that a trickle of Safety for the workers of these companies is necessary.

Stournaras stressed the need to maintain “selective economic support measures targeting the sectors of the economy and categories of workers most affected by the pandemic”, which implies that support for unsustainable businesses should cease, as it is. is also the general orientation in Europe. The support measures may well have kept businesses that would normally have gone out of business under normal life on life support, according to the report.

“The possible default of a large number of ultimately non-viable companies would lead to credit risks (new wave of non-performing loans) and budgetary risks (recall of State guarantees, cancellation of debt to the State, increase unemployment benefits) substantial. , which would negatively affect the financial sector and delay the return to fiscal sustainability, ”he argued.

The report further predicts significant job losses, “particularly in intermediation services and sectors with high low-skilled labor force.” Bankruptcies, job losses and declining incomes will inevitably lead to an increase in private debt and a further increase in the already considerable volume of NPLs.

For Stournaras, the challenge is to tackle the above issues with strong growth. The central bank is relatively optimistic for 2021, sticking to its forecast of an economic expansion of 4.2%, higher than that of the government and the European Commission at 3.5%. However, he warned that this involved a lot of uncertainty due to the risks associated with the evolution of the pandemic as well as the particular characteristics of the Greek economy.

“How quickly the economy recovers will depend on three critical factors: accelerating vaccine deployment programs nationally and globally, sustaining support targeting those most affected, and how quickly National Recovery and Resilience activates.” . Plan, ”he said.

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