course of the global economy, stemming, among other things, from protectionist voices and actions around the world, the implementation of a hard brexit, and a likely exacerbation of the refugee crisis. these risks could slow down the recovery of the greek economy, both through negative effects on tourism and trade and through a slower - than - expected decline in yields on greek government bonds due to the risk aversion from global investors. t h e containment of the abovementioned risks and the realization of the positive prospects of the greek economy require a number of tangible and concerted actions. these actions, which will ensure the successful conclusion of the esm programme and the return to financial markets, comprise the following : 1st stepping up the pace of reforms and privatizations. the government should remain committed to the timely implementation of the structural reforms and privatizations that have been agreed upon with the institutions. particular emphasis should be placed on : simplifying investment licensing procedures, reducing administrative burden on businesses and facilitating competition, opening up the remaining regulated professions and network industries, scaling up the privatization and public real estate programme, and improving its governance, modernizing and strengthening public administration, enhancing judicial efficiency and speeding up court proceedings. in this context, the on - going second review should be completed without undue delays, so as to solidify the recovery prospects and the return to robust positive growth in 2017. 2nd tackling the high stock of non - performing exposures ( npes ). alongside the structural reforms, using idle public property to attract foreign direct investment through appropriate land use legislation and speeding up privatization, there is an urgent need to address the private debt overhang problem, in order to facilitate the recovery through a stronger pick - up in lending. on the one hand, the high stock of npes reduces bank profitability and thus constrains the supply of credit, which primarily affects bank - dependent smes. on the other hand, high npes 4 / 7 bis central bankers'speeches delay corporate restructuring and thus thwart the ability of viable firms to finance new investment projects. tackling the high stock of non - performing loans is currently the greatest challenge facing the greek banking system and the greek economy. greece has the second highest npe ratio in europe ( after cyprus ), with non - performing exposures at the end of the first half of 2016 reaching 45. 1 % of total exposures or €108. 7 billion. a number of initiatives are underway with the goal

the eurogroup decisions made as far back as in november 2012 ( and iterated most recently in may 2016 ), and the threat of default and euro area exit brandished against greece by some of our partners whenever negotiations seemed to stall, even on just technical matters, has weighed heavily on market sentiment, further fueling uncertainty and negatively affecting the economic climate in greece. certain miscalculations in the design of the economic adjustment programmes could also explain greece ’ s lagging behind vis – a – vis the other countries, previously under programmes. given the size of the fiscal imbalances back in may 2010, when the first economic adjustment programme was initiated, more emphasis was placed on fiscal consolidation, pension reform, streamlining budgetary procedures, increasing fiscal transparency, as well as financial sector restructuring. less emphasis was given on growth - enhancing labour market reforms and, most notably, on product and services market reforms and reorganizing the public sector. in addition, growth forecasts were too optimistic and fiscal multipliers turned out to be higher than initially anticipated. as a result, the economy was trapped in a vicious circle of austerity, recession, rising unemployment and private debt overhang. despite the recouping of losses in international competitiveness, exports have underperformed relative to what could have been anticipated based on historical correlations. this can in part be explained by the lack of financing, higher long - term borrowing costs, increased uncertainty, as well as the higher tax burden, which slows or even halts progress towards restoring overall competitiveness. in addition, this can also be attributed to a number of inherent structural weaknesses that hamper the international market penetration of greek products and involve noncost aspects such as product quality, protected designation of origin and branding, red tape, etc. hence, despite the improvement in structural competitiveness over the period 2013 – 2014 ( according to a number of indices compiled by the oecd, the world bank, and the world economic forum ), greece still ranks at the lower end of the advanced economies, and progress has stalled or even reversed slightly in recent years. 3. recent developments and prospects in spite of the delays and missteps, progress in correcting past mistakes has been remarkable. for example, the new esm programme in place since august 2015 builds on the successes of the first two programmes ( i. e. the correction of fiscal and external imbalances and the improvement of labour cost competitiveness ) and aims at