is subject to exceptionally high implementation risks. the debt exchange operation has been successful, official financing has been scaled up. this has improved debt sustainability prospects : the estimated debt - to - gdp ratio could be brought to about 116½ % in 2020. but this all depends on one key condition, namely that greece fully implements the programme. debt dynamics are extremely sensitive to implementation slippages. delayed fiscal consolidation, lower privatisation proceeds or slower structural reforms : such scenarios would translate into weaker economic growth and worsen again debt sustainability. without a regime - change in policy implementation and a much broader political consensus in favour of painful, but necessary reforms, there is a high risk that the programme derails. therefore, political courage is more needed than ever. bis central bankers ’ speeches let me now comment in some more detail on three key areas : fiscal adjustment, competitiveness gains and financial sector issues. fiscal adjustment the greek authorities and the greek people deserve recognition for the significant fiscal adjustment they have achieved over the last two years : despite the deep recession, the general government deficit was reduced by around 6½ % of gdp since 2009 ( from 15¾ % to 9¼ % ). this broadly corresponds to the deficit reduction that was initially envisaged under the programme, i. e. before the 2009 deficit outcome was revised upwards ( by 2. 2 % of gdp ). this is a remarkable achievement. nevertheless, the size of the government is still too large compared to greece ’ s capacity to generate and collect fiscal revenues. moreover, the quality of the fiscal adjustment was mixed. on the one hand, important reforms have started to address greece ’ s high level of public wages and employment and the previously unsustainable pension system. on the other hand, fiscal adjustment has so far excessively relied on an increase in tax rates and across - the - board expenditure cuts. looking ahead, further progress in fiscal consolidation requires the implementation of difficult structural fiscal reforms. closing the large fiscal gap for 2013 – 14 ( 5½ % of gdp ) will be a litmus test for the government ’ s commitment to the programme : without the government ’ s willingness and ability to design and implement the difficult structural fiscal reforms, such a large adjustment cannot be achieved. i call on greece ’ s political class to push through these difficult reforms by confronting vested interests. otherwise the critical mass of structural fiscal reforms necessary to close the medium - term fiscal gap may not be reached. finally, how can we make sure that the

limited voting rights, but may still allow for upside returns to be shared between the state and private shareholders. whenever possible, the private management of banks will be safeguarded. the governance structure of the recapitalisation and resolution processes will be significantly enhanced. this became necessary owing to the very substantial amount of official financing that will be channelled through the existing greek institutions, in particular the hellenic financial stability fund. conclusion let me conclude with a message of hope. yes, the medicine is bitter, but the patient can and will recover if he follows the prescription. looking at successful past experiences of fiscal adjustment in other european countries shows that this is not a lost battle. however, an absolute prerequisite for the adjustment to succeed is strong political ownership. the greek people are not reforming their economy and their state to please the troika ; they are not carrying out sacrifices to please country x or y in the euro area. they are going through this adjustment process for their own good. maximum political ownership should therefore be expected and is key. bis central bankers ’ speeches