If Greece wants to regain investor confidence, which will in turn attract investment and thus lead to economic recovery, capital controls must become a thing of the past, the Center of Planning and Economic Research (KEPE) said in a report released this week.
KEPE’s proposals come in view of recent estimates that average recession this year will be at 0.1 percent as long as a 0.6 percent growth is achieved in the second half of the year.
According to KEPE findings, if the following six conditions are met, capital restrictions can be a thing of the past:
– There must be no delays in the country’s funding program, all remaining structural reforms must be implemented and policies must be put into practice.
– Greece’s debt must be restructured initially in the short term after the completion of the current assessment (October 2016) in order to be certified as truly sustainable and thus paving the way for the inclusion of Greek bonds in the ECB’s quantitative easing program.
– The citizens’ confidence in the government and political-economic system must be restored immediately.
– Greek depositors must regain confidence in the banking system in order to ensure the return of deposits. Capital controls cannot be lifted if 2/3 of the deposits withdrawn in 2014 (approximately 20 billion euros) are not redeposited into the system.
– The EU directive ensuring guarantees of deposits up to 100,000 euros should be applied without exception, thus contributing to creating conditions of confidence in the banking system.
– Banks must address the problem of non-performing loans to achieve goals set by the Bank of Greece for their immediate reduction.
KEPE also adds that auctions should proceed in cases where property or business owners have repeatedly failed to settled their debts. This measure will act as a means of pressure and stem increasing “bad debts”, allowing for liquidity in the real economy.