Greece central bank points to progress, no room to relax: report

ATHENS (BestGrowthStock) – Greece is making progress in its fiscal consolidation efforts but it still has a long way to go, the Bank of Greece says in a new report, the Kathimerini newspaper said on Saturday.

In the report to be published on Tuesday, the central bank will say that the debt-choked country should continue cutting spending to meet its budget deficit goals and boost growth by attracting investments, the paper said.

The central bank will reiterate its May estimate for a contraction of around 4 percent in the Greek economy this year, in line with the government’s forecast, it added.

The central bank was not immediately available for comment.

Greece’s 2010-2013 fiscal plan expects the economy to continue shrinking this year due to tough austerity and tax hikes the country took in turn for a 110 billion euro ($153.5 billion) bailout it agreed wit the EU and the IMF to exit a debt crisis.

The paper said the Bank of Greece will also ask Greek banks to pursue alliances to become stronger vis-a-vis the challenging macroeconomic and fiscal environment.

Greek banks, hit by the country’s debt crisis, have been shut out from wholesale funding for most of this year after their bond portfolios were damaged by successive sovereign credit rating downgrades, forcing them to rely on funding from the European Central Bank.

But there have been indications that interbank markets may gradually open for Greek lenders as the country regains investor confidence.

(Reporting by Angeliki Koutantou; editing by Patrick Graham)

Greece central bank points to progress, no room to relax: report