The Minister of National Economy and Finance and Eurogroup President Kyriakos Pierrakakis highlighted fiscal credibility as a strategic advantage for Europe at a time of mounting pressure in bond markets and higher borrowing costs. He was speaking at a discussion with the Atlantic Council in Bangkok, on the sidelines of the Annual Meetings of the IMF and the World Bank.
“Fiscal credibility is national strength and a strategic resource”, he said, noting that the average yield on 10-year bonds in Europe has risen from 1.1% in 2016 to 4% today, while the average fiscal deficit has more than doubled, from 1.7% to 3.5%.
Markets are watching countries’ fiscal trajectories closely, he said, amid heightened geopolitical and energy risks and greater investment needs in artificial intelligence.
Referring to Greece, Mr Pierrakakis said he expects the economy to sustain growth of more than 2% after the Recovery Fund comes to an end, driven mainly by private investment and exports.
He stressed that the country now has greater credibility in the markets after a decade of fiscal adjustment and reforms, while the reduction in public debt and improved fiscal performance strengthen its ability to deal with future crises.
He also said the challenge was to maintain the momentum of reform and boost productivity, so that growth does not depend solely on European funding.
At European level, he stressed the need to speed up reforms to capital markets and the Banking Union, remove barriers to cross-border financing and channel more European savings into productive investment.
His priorities also included integrating the energy market and boosting technology investment to improve Europe’s competitiveness.
*See the full discussion in the right-hand column under Supporting Material.