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September 21, 2019

Bank of Greece asks for clarity after the bailout program

Bank of GreeceThe foreign creditors of Greece have to specify whether the country will benefit from a utility after the rescue plan expires next August. Greece has relied on financial aid from the international lenders since 2010, but said it wanted to get out of the program when the current bailout package is over.

So the country will have to attract financing through the international markets.

The Greece central bank said a “safe framework for support” would still boost investor confidence and lower borrowing costs, helping the economy return to growth after losing about a third of its value over the past seven years.

“In order to consolidate confidence in the medium term, it is equally important to clarify the format that the post-program support of the Greek economy will receive”, said the Bank of Greece in a report on monetary policy.

The refinement will help banks if the country’s credit rating is not upgraded by the end of the program.

Greek bonds are still accepted as eligible collateral by the European Central Bank and will be included in the program for quantitative easing of the ECB, whether this will happen during the planned period of validity or during the period of reinvestment.

Meanwhile, it is “extremely urgent” for Greece to continue implementing the reforms agreed in the bailout plan to accelerate privatization and prepare for the timely conclusion of the latest review of its rescue loan next year. The central bank adds that the focus of its economic policy must be to overcome the problem of bank non-performing loans, remove investment restrictions, and overcome excessive public debt.

“These actions will facilitate the return to financial normality, the complete abolition of capital controls and the sustainable recovery of the economy after eight years of sacrifice”, said the analysis.

The bank has confirmed its growth forecast for this year. It said the economy is expected to expand by 1.6% in 2017, by 2.4% in 2018 and by 2.5% in 2019.

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