Bank of Greece Governor Stournaras: Greece's Recovery Is an “Economic Miracle” Built on Stability and Reform

Bank of Greece Governor Yannis Stournaras has described Greece's economic turnaround as an "economic miracle," while warning that fiscal discipline, political stability and structural reforms remain essential to sustaining the country's progress.

In an extensive interview with OPEN TV's "10 Pantou", Stournaras discussed inflation, wages, pensions, taxation, competition, the banking system and the outlook for the Greek economy, arguing that Greece must avoid policy choices that could jeopardize the gains achieved over the past decade.

Competition Distortions Continue to Fuel Inflation

Stournaras suggested that weak competition in certain sectors of the economy continues to contribute to higher prices.

He questioned whether some professions and intermediary services remain "closed" in practice despite market liberalization, arguing that excessive mediation costs and barriers to entry may be distorting competition and ultimately feeding inflation.

"It is not only a matter of profiteering," he said, stressing that policymakers should identify sectors where competition remains insufficient and where unjustified profit margins persist.

The Governor noted that inflation is a global phenomenon driven primarily by supply-side shocks, including energy costs and climate-related disruptions. At the same time, he argued that Greece's stronger economic growth compared with the rest of the euro area has also contributed to relatively higher domestic inflation through increased demand.

No Fiscal Room for a 13th Pension

Stournaras strongly defended fiscal discipline, warning against permanent spending commitments that are not backed by sustainable public finances.

Referring to proposals to restore a 13th monthly pension, he said Greece currently has no fiscal space for such measures under the European Union's revised fiscal framework.

According to the Governor, any permanent increase in public spending would require either permanent new revenues or equivalent spending cuts elsewhere in the state budget.

"There is currently no room for additional spending unless a corresponding fiscal margin is created," he emphasized.

"Greece Has Achieved an Economic Miracle"

Stournaras argued that Greece's transformation over the past decade is widely recognized internationally.

"The international economic community speaks of Greece's economic miracle, whether we like it or not," he said.

He recalled that the overwhelming majority of economists, analysts and policymakers once believed Greece would leave the euro area and face economic collapse.

"Instead, Greece remained in the euro, is now growing faster than many European economies and continues to reduce its public debt," he noted.

Looking back at the sovereign debt crisis, Stournaras maintained that excessive fiscal expansion before 2009 pushed Greece into the crisis, while the bailout programmes ultimately became "part of the solution rather than part of the problem."

Political Consensus Is Essential

The Governor also stressed the importance of political consensus in maintaining economic stability.

He pointed to the coalition government between New Democracy, PASOK and Democratic Left (DIMAR) as proof that broad political cooperation is possible even during periods of severe crisis.

"I hope Greece develops a stronger culture of consensus," he said, adding that he maintains communication with political figures from across the political spectrum.

Fighting Tax Evasion Before Cutting VAT

Addressing Greece's tax system, Stournaras argued that the country's relatively high indirect taxes stem largely from persistent tax evasion in direct taxation.

He suggested that meaningful reductions in VAT and other indirect taxes would become possible only after improving tax collection and expanding compliance among income taxpayers.

According to the Governor, strengthening tax compliance would create the fiscal space needed to reduce the burden on consumption without jeopardizing public finances.

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