BoG’s Stournaras: Closeness to IMF’s positions, not its methods

14 February 2017
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Bank of Greece (BoG) Gov. Yannis Stournaras said a report by the ECB over the Greek debt’s sustainability is ready, with only medium-term measures remaining to be included.

His comments came during his follow up statements before members of a relevant economic affairs committee in Athens on Monday. Moreover, he said his positions regarding the Greek debt are “close to the IMF’s”, while he disagreed with statements attributed to German FinMin Wolfgang Schaeuble over the possible scenario of “Grexit”.

In a clear break from the publicly stated positions of the current leftist Greek government, Stournaras said he favors a lowering of the tax-free threshold for annual income, but said this should be staggered, based on the number of dependents a taxpayer lists.

“The IMF losses its argument with the method it employs; it’s right to say we (Greece) have the biggest percentage of GDP for pensions, but it’s not 11 percent of GDP, as it says. In other EU countries social security benefits are included in the public sector’s payroll expenditures. Therefore, it is around 7 percent, although it remains the biggest (percentage) in the Euro zone. We should make a reform at 2 percent and see whether we can transform this into a reduction of taxes,” he said.
In other statements, he appeared optimistic that the country can achieve a 3.5 percent budget surplus as a percentage of GDP, something the IMF has called unrealistic under the current conditions. Nevertheless, he reminded that the BoG favors a fiscal target of 2 percent.

Moreover, he said a successful completion of the second review of the Greek program and a subsequent inclusion of Greek bonds in the ECB’s QE stimulus plan will mean that an abolition of capital controls “is a matter of time”.

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