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5,7% of the national deficit is a result of inadequate management

12 February 2010 / 18:02:04  GRReporter
2506 reads

Victoria Mindova

Almost half of the present value of the national deficit of Greece is formed as a result of bad government and lack of “political courage” by all Greek governments in the past few years. According to a report of the European Commission assessing of the economic situation in the country for 5,7% of the national deficit (which has currently reached 12,7% of the GDP) are responsible the governing politicians of Greece. They systematically and irresponsibly avoided to take the political responsibility for the introduction of radical changes in the socio – economic life of Greece before and during the period of crisis.

Only 7% of the national deficit is formed as a result of the world economic crises which started in the end of the year 2008. The data was made public by Gikas Hardouvelis – an economic adviser of the Eurobank at a conference, organized by the Athenian Chamber of Tradesmen and Industrials under the heading: “A research of the crisis – suggestions for exiting”. In the event took part economists, bankers and financial experts from the business elite of the country.

According to all participants in the meeting the government of PASOK has to undertake some radical changes in the structure of the national administration and more decisive cuts of the public expenses. The increase of the efficiency of the government management and the revision of the tax reforms which were stipulated in the budget for the year 2010 by George Papandreou are also a subject of critics by the businesses in the country. “In a period of recession the increase of the taxes is like squeezing an already squeezed lemon”, commented on the changes in the taxation legislation Yiannos Papantoniou, former minister of economy and finance.

According to the financial expert the accent of the tax reforms should fall on the increase of the excise duties and the successful exposure of the tax frauds, rather than the “punishment’ of the regular tax payers by increasing the direct taxes. The former minister underlined that at present George Papandreou has to justify the trust of his voters at the parliament elections and has to set a more ambitious plan for the decrease of the national deficit to 8% of the GDP until the end of 2010 before he has lost the public confidence.

One of the suggestions made towards the current government by the former deputy minister of foreign affairs, Petros Doukas was the preparation of a program for privatization of governmental corporations which would increase the amount of the public incomes. Another important step is the restructuring of the local administration with the aim of decreasing the expenses which currently amount up to three billion euro per year. The exaggerated budget of the regional administrations and the lack of control over the execution of the planned activities in the outskirts of the country are a “black whole” in the national treasury according to the expert.

Regarding the lack of confidence of the foreign investors, Doukas made clear that currently for the country it is of great importance to be introduced immediate radical changes in the management of the public expenses and stated that: “not promises, but only real actions and cuts in the governmental expenses will help us to gain back the lost trust.” At the end of 2009 Greece was granted credits 2,5 times more expensive than Germany was and this difference will continue to grow if the socialistic government does not undertake the necessary measures.

In the conference took part also professor Yannis Stournaras, a professor in the Economic University of Athens and director of the Foundation for economic and industrial research. In his presentation the professor underlined how important it is to restore the image of Greece in front of the international markets and explained the inversely proportional relation between the increase in the spread index and the increase of the investments in the country. “Right now the expression of cash loss from the 10 point spread rise is 55 million euros” explained Stournaras and added that the government needs a second plan for immediate action because the results of the presented by Papandreou reforms will have any result only after two or three years.

Tags: Economydeficit reforms government
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