Financial crises

Total credit in Greece's banking system expanded 0.7 percent year-on-year in March after a 1.0 percent decline in the previous month, Bank of Greece data showed on Friday.

[Reuters]

Eurobank applied to take part in Greece's Hercules bad loan reduction scheme with a third securitisation, dubbed Cairo-III, the country's third-largest bank said on Friday.

Banks in Greece have been working to reduce a pile of about 75 billion euros in bad loans, a legacy of a financial crisis that shrank the country's economy by a quarter.

The decision to exclude from state loan guarantees any enterprises that had outstanding debts before the coronavirus crisis, or had been funded through a state guarantee but became insolvent, was a necessary one.

The rule will ensure that strategic defaulters will not seek to take advantage of the crisis.

Greece will raise only a fraction of what it initially expected from privatizations this year, as the coronavirus downturn has forced it to put planned asset sales on hold to avoid low offers.

The Bank of Greece is working on a plan for the creation of a "bad bank" to which all nonperforming loans (NPLs) of banks will be transferred. The central bank intends to present the plan to the banks, the government and the European Central Bank's Single Supervisory Mechanism (SSM) by end-May.

Estimates pointing to a deep recession in Greece this year and a steep rise in the national debt as a result of measures to contain the coronavirus pandemic are generating questions about what will happen once the crisis subsides and raising new debt sustainability concerns. Economists asked by Kathimerini stress that Greece is armed with weapons it did not have before.

The Greek economy, hit by coronavirus restrictions, is expected to shrink by 5-10 percent this year, the country's finance minister said on Saturday.

"It seems we have been settling at a range of between 5 and 10 percentage points," Finance Minister Christos Staikouras told Open television station.

For the first time in many years tax revenues are projected to drop below the 70-billion-euro level, while before the debt crisis of the 2010s they had been amounting to some 105 billion per annum. The impact of the coronavirus crisis will also be felt in next year's takings.

Against the dramatic forecasts for fiscal figures to slump to levels reminiscent of the worst years of the debt crisis, there is also optimism within the government that things will actually turn out to be rather better.

The Institute for Economic Research at the Bulgarian Academy of Sciences proposes three scenarios for the macroeconomic consequences in Bulgaria of fighting COVID-19, the Academy reported.