ECB’s Stournaras: Greek Government Bonds ‘Just One Step Behind Investment Grade’

21 May 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Sunday reiterated his expectation of a return of Greek sovereign debt to investment grade soon.

In an interview with the Sunday edition of Greek daily Kathimerini, Stournaras, who heads the Bank of Greece, said that Greek government bonds were ‘right now, just one step behind investment grade, which signals and certifies a return to normalcy.’

The support of Greece’s partners and in particular of European institutions was the ‘decisive factor’ in the resurrection of the Greek economy, he said, citing among other examples ‘the possibility of purchasing Greek government securities from the European Central Bank – despite the lack of investment grade’.

Against the backdrop of Greek parliamentary elections taking place today, Stournaras urged that the next government pursue reforms to improve potential output and work on expanding the primary surplus of the public sector ‘as much as possible’ by not spending windfall tax revenues this year.

Exports should be promoted and dependency on energy imports reduced, he wrote, whilst foreign direct investment warranted maximising.

‘As challenges to global financial stability remain high, with successive crises and pervasive, heightened uncertainty, the greatest risk to the prospects of the Greek economy would be the loss of credibility of the economic policy pursued, which has been so difficult to recover, the violation of commitments made and a return to past practices’, he warned.