BUSINESS
09/24/2011 01:31 pm ET Updated Nov 24, 2011

Greece must push reforms or face dramatic fallout:central banker

ATHENS (Reuters) - Debt-laden Greece must push forward with reforms prescribed by its international lenders or face dramatic consequences, the country's central banker said in an interview.

The European Union and the International Monetary Fund have expressed impatience with the slow pace at which Greece has been implementing measures to conform with their bailout plan and Athens now is intent on persuading them of its commitment to fulfilling its obligations.

"Either we immediately proceed with substantial implementation of structural reforms and control debt dynamics or face dramatic developments," George Provopoulos, also a European Central Bank (ECB) Governing Council member, told Sunday Real News newspaper.

"We have to break this vicious circle. We have to focus on radical reforms in the public sector, to eliminate the factors which constantly generate deficits and debt," he said.

Provopoulos said that if Greece does not implement the reforms markets will remain distrustful.

Due to the country's debt crisis, Greek banks have been shut out of wholesale funding markets and have become dependent on the ECB for liquidity.

On Friday, Moody's downgraded the ratings of eight Greek banks, citing a struggling domestic economy and declining deposits among reasons for the move, which was expected by markets.

Provopoulos said that the completion of an audit of Greek banks' loan portfolios by BlackRock Solutions would help them regain access to market funding.

"The absolute transparency regarding their balances will allow our banks to return faster to markets and will restore their funding ability," he said.

(Reporting by Renee Maltezou)