Athens Macedonian News Agency: News in English, 16-06-15

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

CONTENTS

[01] Debt relief measures must be specified, Bank of Greece says

[02] 56,701 identified migrants and refugees in Greece on Wednesday

[03] Chinese tourist drowns at Navaghio beach on Zakynthos

[04] No metro, tram after 21:00 on Wednesday and from 12:00 to 17:00 on Thursday

[01] Debt relief measures must be specified, Bank of Greece says

The central bank, in its Monetary Policy Report 2015-2016 submitted to Parliament, noted that the public debt problem was not dealt with in the current favorable environment of very low interest rates, but rather was postponed to be re-examined in the post-programme period. The final decision on debt are conditional on a positive final assessment of programme implementation and the outcome of an updated debt sustainability analysis to be produced in 2018.

The Bank of Greece considers that there are important reasons to act now. First, global interest rates are at historical lows and the term structure is relatively flat, implying that, at the same cost, debt relief now could be much more beneficial to Greece than a few years down the road, when global interest rates might be higher. Second, debt relief now will contribute to improved confidence of international investors in the country, hence, to lower risk premia, lower cost of financing, stronger investment and improved growth prospects for the Greek economy.

Sensible debt relief measures may include (a) extension of maturities; (b) smoothing of interest payments over time; (c) restoration of transfers of ANFA and SMP profits; (d) swap of IMF loans with ESM loans.

On the basis of an analysis presented in this report, debt relief measures should be accompanied by a lower medium-term fiscal target. Specifically, the final target for a general government primary surplus of 3.5 pct of GDP could be reduced to 2 pct of GDP after 2018, enabling a faster return of the Greek economy to robust and sustainable growth rates. Besides, past experience has shown that only few countries have been able to maintain high primary surpluses of 3.5 pct of GDP for relatively long periods, as required in the case of Greece from 2018 onwards. Public debt sustainability scenarios explored by the staff of the Economic Analysis and Research Department of the Bank of Greece show that primary surpluses of 2 pct of GDP from 2018 onwards are consistent with public debt sustainability assuming (a) an extension of loan maturities by 20 years and (b) smoothing of capitalised deferred interest payments over a 20-year period.

Moreover, the easing of fiscal targets will allow a lowering of taxation, which is currently high. This would alleviate the consequences for the real economy, thereby strengthening growth in the medium-to-longer term, which could speed up the reduction of public debt, the central bank said in its monetary policy report.

As discussed in the present report, the completion of the first review is expected to restore confidence and boost liquidity and should improve the investment environment in the second half of 2016. According to Bank of Greece estimates, for 2016 as a whole the GDP growth rate should turn out marginally negative, at -0.3 pct, as the positive growth rates expected for the third and fourth quarters of 2016 should partly offset the negative outcome of the first half of the year. Nevertheless, risks to the outlook of the Greek economy remain. The greatest risk relates to the excessive − as the Bank of Greece sees it − emphasis on tax increases as decided in the context of the first review in order to cover the fiscal gap of 2016-2018: a stronger than expected recessionary effect from the higher tax burden could imply, as an indirect impact, a shortfall against revenue targets. Furthermore, any delay in the implementation of reforms and privatisations envisaged in the programme would dampen economic growth, thereby refuelling uncertainty, undermining confidence and weakening the prospects of a definitive exit from the crisis. In addition, an exacerbation of the refugee crisis could hurt tourism and trade, slowing economic recovery. At the same time, risks and uncertainties about the course of the global economy and the outcome of the upcoming British referendum still exist, which could slow the recovery of the Greek economy.

[02] 56,701 identified migrants and refugees in Greece on Wednesday

According to the Refugee Crisis Management Coordination Body's figures, 23,837 of the refugees are in northern Greece, 9,943 are hosted in the region of Attica, 8,442 on the Greek islands and 2,482 are hosted in different areas in central and southern Greece. 5,602 refugees and migrants are hosted in several facilities rented by the UNHCR, 4,915 are staying in non-organised facilities while approximately 1,500 persons are living outside organised facilities.

[03] Chinese tourist drowns at Navaghio beach on Zakynthos

The reasons of his death are unknown. Zakynthos port authority is conducting an investigation.

[04] No metro, tram after 21:00 on Wednesday and from 12:00 to 17:00 on Thursday

Metro will stop running from 12:00 to 17:00 on Thursday, instead of Friday, due to a work stoppage called by the workers' union (STASY) who protest against government's plans for the privatisation of Athens' public transport as well as for the delay in the signing of a new collective labour contract.

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