Greece needs to implement responsible economic policy after the memoranda, report says

The Greek government must continue implementing a responsible economic policy after the country’s exit from the memorandum, the Parliament’s State Budget Office said in a report released on Wednesday.

Frangiskos Koutentakis, head of the State Budget Office, presenting the report on the second quarter of 2018, said that after the country’s exit from the memorandum the country must send messages of changes in the direction of economic policy since Greece will be at the focus of international markets.

It is very important to send the right messages to markets, which will evaluate the country continuously, and to avoid the use of political pressure to change the direction of economic policy, Koutentakis said, adding that Greece must be very careful in preparing its return to international capital markets, since there was no need to hurry as the country’s budget is currently covered.

Koutentakis said that a measure to cut pensions in 2019 is not fiscally necessary, although this measure has been agreed politically with the country’s creditors.

He noted that a Eurogroup decision to extend the maturities of Greek state bonds by 10 years was very positive, since it was not accompanied by preconditions. He added, however, that reservations expressed by the IMF over the sustainability of Greek debt would be taken under consideration by capital markets.

Commenting on the outlook of the Greek economy, Koutentakis said prospects were positive both in employment and wages, the state budget and the current account balance. He noted that non-performing loans were dropping, while taxpayers’ arrears fell, although slightly. He stressed that the fact that both the unemployment rate and the inflation rate remained unchanged in the first quarter of 2018 were a cause of concern.

The budget office director said budget execution so far showed that the government will achieve its goals for a primary surplus in 2018 and he noted that exports must continue rising in the long-term.

“Economic conditions remain favourable in the second quarter. The growth rate was positive, employment and wages are rising, the current account balance is relatively balanced, and budget execution is within targets,” the report said.

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