He predicted that as economic activity recovers, as we approach the investment stage for Greek government securities and as the consolidation of bank balance sheets progresses, the difference in the cost of money in Greece compared to other European countries will decrease, he predicted. the Governor of the Bank of Greece Giannis Stournaras speaking today at the conference of the Hellenic Confederation of Commerce and Entrepreneurship (ESEE) “FUTURE OF RETAIL 2022”.
He admitted that the cost of borrowing in Greece is one of the highest in the eurozone, both for businesses and households. According to the data he cited, the differences are larger in the relatively small business loans, ie loans of less than 1 million euros. In March 2022, the interest rate on these loans in Greece was 3.90%, while the average in the euro area was 1.68%, ie 2.22 percentage points lower. Nevertheless, the lending rates of banks in our country have decreased significantly recently: the average interest rate on interest-bearing loans to small and medium-sized enterprises in March 2022 was 3.19% compared to 3.75% in January 2020. The interest rate on the mutual accounts (through which small and medium-sized commercial enterprises mainly borrow) is at a higher level, 4.43%, which, however, has decreased by 0.62 percentage points compared to January 2020.
Mr. Stournaras pointed out that the gap in the cost of borrowing companies between Greece and the euro area has been limited in recent years: to 170 basis points (bp) on average in the period 2020-2022 compared to 290 bp. on average in the period 2011-2019. This, of course, was largely the result of the ECB’s facilitating single monetary policy.
Regarding deposits, the BoG governor said that for a few months now, the accumulation of deposits by companies has been slowly reversing, helping to increase the total expenditure of the economy and offsetting the negative impact of rising energy and food prices. Referring to the increase in interest rates that threatens investment, he pointed out that bank interest rates are currently at historically low levels and in nominal terms are significantly behind inflation, ie real interest rates are much lower than in previous years. In any case, as he said, Greece is one of the few countries in the European Union where it is expected to make full use of the loans of the Recovery Fund., in fact securing all the resources to which it is entitled. In total, the country plans to receive 12.7 billion euros in loans from the Recovery Fund by 2026.