Brussels (Brussels Morning) Greece is hoping this year’s tourist season will prevent a wave of insolvencies in the tourism and hospitality sectors, Reuters reports.
Given that the coronavirus crisis brought many businesses in the sector to their knees, the Bank of Greece anticipates that some 25% of loans to the sector will turn out to be non-performing (NPLs). Tourism accounts for roughly 20% of the Greek economy.
Former Deputy Minister of Tourism Manos Konsolas warned in October last year that NPLs in tourism had reached 3 billion euro.
Highest NPL ratios
While the NPL ratio in Greece improved significantly since the debt crisis, it still remains the highest in the EU at 30.2%. Greek bank portfolios are carrying some 47.4 billion euro worth of NPLs.
The tourism sector in Greece posted the worst results thus far in 2020, with the number of arrivals dropping from roughly 33 million in 2019 to about 7 million in 2020 and the sector generating revenues of about 4 billion euro in contrast with approximately 18 billion in 2019.
The Greek government is expecting tourism revenues to reach 40% of 2019 levels this year, taking into consideration that vaccination campaigns are picking up pace.
On Saturday, Greece scrapped mandatory quarantine for foreign visitors provided they can present documents that show they have been vaccinated or recently tested negative for COVID-19.
Nicholas Magginas, chief economist of the National Bank of Greece, pointed out “those who had problems with non-performing loans in the booming years of 2018 and 2019 have little chance of recovering this year.”
Earlier this month, Andrea Enria, European Central Bank Supervisory Board chair, observed that while NPL repayments in the EU had gone more smoothly than expected, Greek banks needed to be aware that lenders might be underestimating risks. He cautioned that the crisis has not yet run its course.