Debt-laden Greece’s economy is on the rebound after escaping the threat of financial meltdown, it is expected to return to growth in 2014, but challenges remain, amid deep recession and increasing poverty rates, central Bank of Greece Governor George Provopoulos said on Monday.
“The danger of a chaotic bankruptcy and possible exit from the euro has been averted…However, all risks have not been diminished,” Provopoulos said, presenting the bank’s annual report on the condition of Greek economy during a meeting of shareholders in Athens.
Noting that over the past few months economic conditions have improved, he presented as an example the reduction of the general government deficit by 9 percentage points of GDP since the beginning of the Greek debt crisis in 2009.
Provopoulos stressed the necessity to continue the implementation of painful measures in order to slash deficits, return to growth and exit the debt crisis under targets and timetables set in the bailout program signed with international lenders in 2010.
“Recession cannot be used as an excuse not to fulfill pledges…On the contrary, the bigger than expected recession means that we need speed up the implementation of structural reforms…The danger of running off track has not vanished,” he warned.
The Bank of Greece forecasts a 4.5 percent contraction of Greece’s GDP this year, higher unemployment rates than the 24.5 on average last year in coming months and the start of recovery in 2014, as long as the country will stick to the implementation of the stability and growth program.
According to the bank’s fresh estimates, the rate of children living in poverty in Greece today has risen to 23.3 percent up from 19.3 percent in 2005.
Pointing to the rates of unemployment and poverty after rounds of harsh salary cuts and tax hikes over the past two years, the Greek official concluded that the government should now try to ease the burdens of the low earning taxpayers and address wide-spread tax dodging among the most affluent Greeks.
Greece’s government plans a tax system overhaul this spring, as auditors of the European Union and the International Monetary Fund creditors returned to Athens on Monday to access the progress made this winter ahead of the release of further rescue loans to the country.