Kyriakos Pierrakakis, Greece’s Minister of National Economy and Finance and president of the Eurogroup, took part in the International Monetary Fund’s (IMF) main discussion on the global economy, entitled “Debate on the Global Economy: Forging Resilient and Dynamic Economies for the Future”, which was held in Bangkok as part of the IMF and World Bank Annual Meetings.
The discussion also featured IMF managing director Kristalina Georgieva, Thailand’s deputy prime minister and finance minister Ekniti Nitithanprapas, Argentina’s economy minister Luis Caputo, and Central Bank of Nigeria governor Olayemi Cardoso.
The discussion was moderated by Bloomberg journalist Lisa Abramowicz.
The IMF’s managing director, Kristalina Georgieva, singled out Greece, praising its early repayment of its debt obligations and the country’s new role: Greece now funds capacity-development and technical-assistance programmes in other countries.
“Greece has learned a great deal and now wants to share that knowledge with others,” she said, concluding with a “well done” for the Greek initiative.
Here are Kyriakos Pierrakakis’s remarks during the discussion:
Europe’s resilience and Greece’s experience
Lisa Abramowicz: “Speaking of high energy costs and a war affecting an entire region, let’s turn to Europe. I apologise, but this has been one of the dominant themes at the Annual Meetings so far: Europe’s resilience, the problems facing France right now and, more broadly, the situation in the region.
Mr Pierrakakis, would you say that the pessimism we are hearing is misplaced? Is there any aspect of eurozone resilience that may be underappreciated?”
Kyriakos Pierrakakis: “First of all, I would say that we are watching developments closely, but we are not in a state of alarm.
And we are not in a state of alarm because we know that the fundamentals are strong. If there is one word that defines Europe, it is resilience. And I believe we have demonstrated that through a series of crises.
Clearly, we are operating in a high-yield bond environment today. If we compare 2026 with 2016, the average yield on a 10-year bond was 1.1% in 2016. Today, it stands at 4%.
It is 5.4% in the United Kingdom, 5.2% in the United States, 4.9% in France and, notably, 4.4% in Greece.
We all know that markets look at countries’ fiscal trajectory. And clearly, in a high-yield environment, that matters much more.
If I may draw on our national experience here, I believe Greece shows that fiscal consolidation, as Kristalina just said, is a necessary condition for achieving growth. And we have managed to do that.
I come from a country that used to receive support from this organisation. Today, we are a country that supports its citizens and businesses at a time when we face significant challenges ahead of winter because of the energy crisis you just mentioned.”.
From bailouts to providing technical assistance – Kristalina Georgieva’s praise
Lisa Abramowicz: “Mr Pierrakakis, there are a few issues I would like to bring up. First, I want to give you the opportunity to talk about Greece’s experience and what it might mean for France.
More specifically, in light of what the managing director said, how can Europe address these imbalances? European and Chinese officials are currently discussing imports of hybrid vehicles and how to manage this relationship, which has become more difficult.
What is the right balance? How can you boost innovation while ensuring self-sufficiency, reducing debt and maintaining a common regulatory framework?”
Kyriakos Pierrakakis: “It is certainly true that we are trying to do many things at once. In the Eurogroup, we have broadened the range of issues we discuss as finance ministers.
Traditionally, discussions in the Eurogroup, particularly ten or 15 years ago, focused on fiscal issues.
Those issues are still, of course, the foundation. That is exactly what Kristalina said earlier. A collective trauma can be a very powerful lesson.
If we look at the statistics today, five countries in Europe are running a fiscal surplus on a general government basis. One is Denmark, while the other four — Greece, Cyprus, Ireland and Portugal — were in adjustment programmes in the previous decade.
That, then, was a lesson learned through collective trauma.
Ideally, though, fiscal consolidation should not be the result of a traumatic experience. It should come from inspiration.
And since you mentioned what others can learn from Greece, I do not like the idea of lessons in politics. I believe in inspiration. We should, therefore, inspire one another.
That is the point.
The environment in which we operate today is more challenging. Just look at the bond markets, as I mentioned earlier. We have geopolitical fragmentation. Energy costs are higher. Europe faces fiscal pressures.
The average fiscal deficit was 1.7% ten years ago. Today it is 3.5%.
There are greater needs for social spending. There are greater needs for investment, for all the investment we need to make. And there is also Artificial Intelligence, which you mentioned earlier.
Artificial Intelligence is not just a technological force. It is also a macroeconomic force. Countries are now competing with technology companies to attract capital. In this environment, we need to deliver.
So clearly, there is a significant challenge.
The inspiration I believe Greece can offer in this context...
By the way, Kristalina, I saw your forecast for Greece’s growth this year. I think we have developed a very healthy relationship with the IMF over the years.”.
Kristalina Georgieva: “Indeed. Greece also moved quickly to repay its obligations to the Fund ahead of schedule. So it is now starting from a clean slate.”.
Kyriakos Pierrakakis: “That is part of our relationship.”
Kristalina Georgieva: “And then Greece said: ‘You know what? We have learned a great deal. We want to share that knowledge with others.’
So Greece now funds capacity development and the provision of technical assistance to other countries.
So I would say, well done.”.
Kyriakos Pierrakakis: “Thank you for that.
And as for forecasts, the IMF is usually the one to make the most cautious estimates, while we try to surprise on the upside.
We intend to do the same next year.
The lesson here, or rather the inspiration we can draw, is this: put your public finances in order.
Markets watch your fiscal trajectory. And particularly in a high-yield bond environment, they scrutinise it even more closely.
But this must go hand in hand with implementing reforms.
And there is a national dimension here.
There are specific reforms, tailored to the particular needs of each European member state or any country in the world, that need to be implemented.
And there are also pan-European reforms that need to move forward.
Fragmentation in Europe acts as a strategic tax. The IMF has estimated that barriers in services and manufacturing are equivalent to imposing tariffs.
According to your calculations, the equivalent is 110% for services and 44% for manufacturing.
These barriers therefore need to be removed.
That is part of the broader discussion you referred to.”.
Lisa Abramowicz: “How many people have asked you whether France is going to collapse?”
Kyriakos Pierrakakis: “I hear various scenarios, particularly as someone from Greece, where 15 years ago we experienced the pressures from bond markets very intensely. We carry that national experience with us.
But, as I said at the outset, we are watching the situation closely, but we are not unduly concerned because we are in a different environment.
Yes, all the challenges remain.
But at the same time, if we take a broad view of Europe, banks are much better capitalised today than they were in the past.
We have a different institutional framework from the one we had in 2010.
And, of course, we have a fiscal framework that countries follow or, even when they deviate from it, return to balance.
In this environment, I am confident that the fiscal path proposed by the French government will be implemented. So we are all part of the same discussion and the same equation.
We are seeing differences in bond yields. We are not seeing fragmentation in Europe.”.
Productivity, Banking Union and European champions
Lisa Abramowicz: “I was speaking to several European businesses here, and they told me they are investing in Asia, even though they also have operations in Europe.
How can Europe start attracting capital again at a time when it needs to develop Artificial Intelligence, invest in productivity and do so responsibly?”
Kyriakos Pierrakakis: “First of all, we have a number of relatively straightforward opportunities for immediate progress before us, which, as we all know in Europe, we have been discussing for a very long time.
I would say there is an interesting parallel between Europe and Greece here.
It is the dividend of doing the obvious. All the things we have not done for a long time, which would deliver additional growth if we implemented them.
The Capital Markets Union and the Banking Union are the clearest examples.
We have brought these initiatives together under a broader reform, the Savings and Investments Union.
Among the positive steps is the agreement we reached last week on market supervision, as part of the European market integration and supervision package (MISP).
The progress made over the past ten months has been greater than that achieved in the previous ten years. We hope to achieve the same in the banking sector.
We recognise that Europe needs larger business groups. We need Еuropean champions if we are to narrow the productivity gap.
Because if you ask me what the biggest problem is, yes, we face a challenge of scale. We face a challenge of fragmentation.
But the number one problem — the biggest challenge — is productivity.
If we compare productivity in the US and Europe over the past 30 years, the annual rate of productivity growth in the US was 1.8%.
In Europe it was 1.1%. That leaves a gap of 0.7 percentage points.
That may seem small at first, but when we calculate it annually and compound it over 30 years, the gap becomes very apparent.
As for labour productivity, in the early 2000s the productivity of European workers was 90% of that of US workers.
Today it is 75%.”.
Lisa Abramowicz: “Are you talking about bank consolidation or corporate mergers?”
Kyriakos Pierrakakis: “Both, because they need to move forward at the same time.
We need European champions, not national champions.
In banking, consolidation is necessary. We need more effective supervision. We need greater scale and more cross-border liquidity.
But I would argue that the same applies to every sector of the economy.
There are sectors where we already have champions, such as technology and telecommunications.
For example, in 5G, Europe had the technology champions, not the United States. Yet we still operate in a highly fragmented environment, for example when it comes to radio spectrum.
We still have 27 different choices when it comes to radio spectrum.
All these issues are set out in the Draghi and Letta reports. We have the diagnosis. I would say that, for the first time in a long while, we also have the political will.
Changes in the international and geopolitical environment now allow that political will to emerge and be translated into results.
And we will be judged by how quickly we deliver those results in an environment far more challenging than the one in which we operated in the past.”.