Γκ. Hardouvelis: The debt is sustainable

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The pandemic and the war are reducing economic activity, increasing inflationary pressures and putting pressure on state budgets, said National Bank President Gikas Hardouvelis at the Delphi Forum, adding that Europe reacted well to the pandemic, both the EC as well as the Eurogroup, with expansionist policies that brought countries closer together. The crisis made the Eurozone stronger, and brought the joint issuance of bonds.

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But Greece also reacted correctly, said Mr. Hardouvelis, explaining that the banks gave more loans, about 18 billion since the beginning of the pandemic. The public sector spent amounts of 40 billion in these two years. The worst was avoided, he said.

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However, Greece has a large budget constraint, according to Mr. Hardouvelis. Public debt is about 360 billion, about twice the annual GDP. And it has promised our partners that by 2060 it will pursue a prudent fiscal policy that will result in an annual surplus of 2.2% of GDP annually. Thus the debt as a percentage of GDP will fall to 55% in 2060.

February forecasts in the Enhanced Supervision Report: Deficit -1.2% in 2022, surplus of 1.5% in 2023 and return to the target of 2.2% in 2024. Debt will be below 200% in 2022 and will be reduced. On the other hand, public debt is sustainable. Because, as Mr. Hardouvelis explained, the average debt revaluation period is about 20 years. Therefore its course is not particularly affected by the level of interest rates even if they rise due to the war. “Also, do not worry about a possible future increase in interest rates. For banks, the rise is welcome,” he said.

Regarding the digital transformation, Mr. Hardouvelis stated that it is a matter of adaptation and survival of Greek banks in a rapidly evolving global market for the provision of financial services.

Greek banks follow the needs of their customers. In 2021, 78% (89%) of Greeks (Europeans) are Internet users and 54% (68%) of them use e-banking. That is, 42% (60%) of citizens use e-banking. In 2015 the percentages were 14% (44%).

Besides, as he added, there is competition from big tech and fintech, which is still limited. Fintech performs a small part of the banking business. Mobility, however, shows the area of ​​buy now pay later but targeting subprime segments.

Giving more details, he said that transactions from the funds are being removed rapidly, while even the conclusion of contracts (75% of consumers in the EIB) for simple products is transferred to OnLine. However, some tasks, which involve important decisions in a client’s life, such as acquiring a home through a mortgage or investing in the client’s savings, require a closer relationship and human contact with a specialized bank executive.

The EIB carries out 6.5 thousand transactions per second, worth 7 billion in 2021, 100 million in cash. Money transactions make up 50% of digital banking. EIB is the best digital bank in Greece and among the most advanced digital in Europe. Recent award from The Economist. The EIB is making huge investments in this area, he said.

Source: Capital

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