* Bank of Greece sticks to -4.5 pct 2013 GDP forecast
* Central bank chief urges strict adherence to bailout
* Expects return to growth in 2014
ATHENS, Feb 25 Greece's economy will keep
shrinking this year before it starts recovering in 2014, central
bank chief George Provopoulos said on Monday, urging the
government to keep up its reforms and stick to its fiscal
Greece's economy has contracted about 20 percent since the
recession began in 2008, with the downturn exacerbated by the
fiscal austerity demanded by its international lenders in return
for a bailout to rescue it from bankruptcy.
"There is no doubt that 2013 will be a difficult year," the
Bank of Greece chief told the bank's shareholders meeting.
The central bank stuck to its forecast for a 4.5 percent
contraction in national output this year, in line with
government and EU Commission projections.
Provopoulos, also a European Central Bank Governing Council
member, said the recession should not be used as an excuse to
ease up on economic reform efforts. That would risk undermining
improved confidence among investors and Greece's international
lenders won through painful sacrifices, he said.
"Strict adherence to the targets will ensure continued
funding and eliminate once and for all the risk of exit from the
euro area, attract new investment and convey a clear message
that the worst is behind us," he said.
His views were echoed by Finance Minister Yannis Stournaras
who stressed the need to not let up on fiscal adjustment
"We have covered two-thirds of the distance towards our
final fiscal goals. We must be careful. If we backtrack, we will
have problems. Greece was at the edge of the cliff but we have
turned the corner," he told Mega TV.
Athens is aiming for a primary budget surplus this year for
the first time since 2002.
Provopoulos also said the economic slump led to a rise in
banks' non-performing loans to 22.5 percent at the end of the
third quarter from 16 percent in December 2011.
Greek banks are merging to cope with the country's debt
crisis and deep recession, which have caused big losses from
government debt writedowns and loan impairments.
He said that in the end, three bigger and stronger banks
with better access to funding markets will be formed.