george a provopoulos : interview in suddeutsche zeitung interview with mr george a provopoulos, governor of the bank of greece, in suddeutsche zeitung, conducted by mr αlexander ηageluken and mr markus zydra, published on 31 january 2013. * * * governor provopoulos, there is still a lot of scepticism towards your country. why should europe ’ s taxpayers give ever more money to greece? as a greek citizen i thank the european taxpayers – 230 billion euros to greece is a gigantic sum. previously we implemented fiscal consolidation, but we did not adequately implement structural reforms. as it became evident that the program was off track, confidence declined. therefore, i can understand the concerns of european taxpayers. but i can tell them : this time the greek government is committed to deliver. the country is changing. european taxpayers will get their money back. that sounds very optimistic. look, there has been a lot of progress. here are just a few examples : greece cut its fiscal deficit by nine percentage points compared to 2009. it cut the structural fiscal deficit – that is, excluding cyclical effects – by even more : 15 percentage points. these figures are unprecedented for any country at any time. plus, by the end of this year, greece will have fully regained the 32 percent loss in competitiveness ( measured in terms of relative unit labor costs ) that we suffered from 2001 to 2009. but that's not the whole story. greece hasn't fulfilled other promises. that is true. in the past structural reforms were not properly or adequately implemented. that was a big mistake, because they were needed to generate growth. and we badly needed measures that could offset the contractionary effects of fiscal consolidation. some economists say : it's not about lower labor costs, the greeks simply don't have products that can compete internationally. that is not true! we have tourism, shipping, light industry, agriculture, sources of renewable energy and so on – plus our ports are uniquely placed to serve as transportation hubs for a much broader area. with our warm weather we could be a significant agricultural producer. instead we import tomatoes from northern europe where the weather is like this ( points out of the window ). a major problem however was the steady erosion of competitiveness. do you really believe the politicians? it was you who testified before a parliamentary comittee last year that you had warned the two previous governments that the

last year and june 2008, inflation rates have risen significantly. june data showed clearly that inflation in the euro area as a whole would be above the medium - term target of 2 % for a more protracted period than previously thought. - moreover, the continuation of vigorous money and credit growth and the absence thus far of significant constraints on bank loan supply in a context of ongoing financial market tensions confirm the assessment of upside risks to price stability over the medium term. - at the same time, while the assessment is made that real gdp growth weakened over the first half of this year ( despite satisfactory figures for the first quarter which reflected temporary factors ), the economic fundamentals of the euro area remain sound. 4. in the first few days after the recent increase in the ecb interest rates, the signals coming from credit markets indicated that the upward trend of inflation expectations has come to a halt. last week's indications were that expectations have started to decline. these are encouraging signs, which, however, should not lead to complacency. indeed, headline inflation rates of around 4 % in the euro area and 4. 9 % in greece are disconcerting. according to recent surveys, both in greece and in the euro area, citizens cite inflation as their number one problem and source of concern. 5. let me assure you that the ecb, as it has always done, will stand ready to achieve its primary objective and fulfill the mandate entrusted to it by 320 million european citizens. that is, it will continue to take any action necessary to ensure the firm anchoring of inflation expectations at sufficiently low levels and to safeguard price stability over the medium term.