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An alarm for an economic destabilization from the Foundation for economic and industrial research

21 January 2010 / 19:01:40  GRReporter
2015 reads

Victoria Mindova

 

If urgent changes in the financial policy of the country are not made and an improvement in the competitiveness of the local market is not accounted the consequences for the Greek economy will be crucial. This became clear after the publication of an opened letter of the Foundation for economic and industrial research to the Prime Minister George Papandreou. In the letter the economic experts are calling for taking immediate actions to prevent the eventual economic, but also social-political destabilization of the country.

In the public appeal is emphasized that the momentum, the indolence and the dogmatism are suffocating the powers of the progress and are harming the development of the competitiveness.  From the foundation are calling for a realistic approach towards the current economic situation in the country and the introduction of all possible measures to decrease the national deficit in shortest terms. The results of an eventual delay of the introduction of an efficient rehabilitating program could lead to a distress in the economic life of the country.

From the foundation are discussing the vicious circle of a high budget deficit and a low competitiveness. “The huge dependency of Greece on internal financing creates opportunities for putting great pressure from the international markets, foreign press as well as from the partners of the euro zone. All of this reflects in the increase of the interest rates indexes, which leads to the increase of the price of our state financing. The paying off of the too big interest rates takes much of the capital for internal investments and the covering of the governmental expenses. The current policy leads to a clear decrease of the welfare of the most vulnerable social groups, while the government is depriving them from exercising their primary civil rights,” concludes the opened letter.

The solution to the problem with the crisis is hiding in a reform of the economic policy conducted at the moment and in the rehabilitation of the competitiveness under the conditions of a modern market economy. According to the foundation fro economic and industrial research the execution of these two conditions will lead to the reinstatement of the profitability of the country in front of the foreign markets and to a financial stability within the borders of Greece. According to the experts the economic reform has to take out three main trends, which undermine the foundations of the economic life in the country for the past few years. The first on is the exaggerated number of employees in the public sector, having no criteria for the efficiency of the work and the quality of the services they offer. The second is the excessive increase of the governmental expenses for pensions in the last twenty years without having the analogical incomes in the pension funds. The third trend is the widely spread corruptions and tax frauds, which are accounted to cost the Greek government billions of euro each year.

The improvement of the competitiveness could be achieved immediately by the breaking of the monopolist industries like transportation and distribution and the opening of the local markets to foreign companies under the governmental supervision. Making the administrative procedures easier is another step to the introduction of effectively working market economy, competitive to the ones of the countries from the euro zone.

In relation to the Program for stability and development the foundation expressed the opinion that it contains “ambitious and at the same time urgent measures, which do not include all the necessary interventions” for the rehabilitation of the local economy. According to the economic experts the government should not postpone the introduction of a complete series of measures for the prevention of an economic collapse. Even the minister of finance Georgios Papakonstatinou did not exclude the probability for the introduction of additional measures like cuts in the expenses and increase of the indirect taxes after June 2010 in case it is impossible to achieve the goals set in the budget. “Right now and not later” said the foundation and explained that the “complete and immediate execution” of the measures for decreasing the budget deficit will have a positive effect on the increase of competitiveness of the Greek economy.

Tags: EconomyPoliticsMarkets IOBE
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