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The Greek debt is sustainable and does not require a write-off

19 December 2014 / 15:12:04  GRReporter
3258 reads

Anastasia Balezdrova

The Greek debt is sustainable and manageable, as stated by chief economist at Alpha Bank Michalis Masourakis. In his words, this is due to two major factors - one of them is the long period of repayment, and the other is the low interest.

"In the period 2016-2047, Greece’s gross financial requirements, including deficit refinancing and interest payments on foreign debt, will be around 4%. As a result of budgetary consolidation, we have no deficits; therefore, from now on Greece will borrow only to repay its debt. In this way, the debt will decrease as a percentage of the gross domestic product," said the banker during a discussion on "Competitiveness and Development: Proposals for Policies", organized by the Institute of Diplomacy and Global Affairs in Athens.

Masourakis added that, for this reason, no political force has the right to claim that it will suspend the interest payments on the debt in order to attract voters.

He criticized the model of the Greek economy in the pre-crisis years, and the fact that the structural reforms have not yet been carried out. "I disagree that the country is currently building a new economic model. It is necessary to carry out the reforms that will enhance competitiveness between companies," the economist said, adding the following:

"The budget consolidation is in the right direction and it will create a productive economy and new jobs over time. However, this cannot happen immediately."

Masourakis pointed out that the Greek economy is in the process of recovery and the first signs of this are already apparent. "It is necessary to trigger all extrovert economic sectors to continue this process. Unfortunately, the deepened political crisis in recent days has again made the situation difficult."

Commenting on how the measures, which the radical left SYRIZA party is preparing to implement if it wins the possible early elections, would affect the economy, he replied with the following example: "Imagine what would happen if student wizards who want to restore ‘the injustices caused by the memorandum’ were working at the Bank of Greece."

Regarding one of the main promises of SYRIZA, namely to abolish the property tax, Masourakis said that whichever party wins the elections, it will have to keep it, since the revenue from it amounts to about 3 billion euro that cover the  payment of salaries and pensions. "The tax was erroneously imposed in the midst of the crisis. Logically, this would have happened in previous years, when people had income from their properties. In other countries, the entire tax goes to the local municipalities to improve the infrastructure and living conditions of their residents. In Greece, the tax was imposed to prevent the dismissal of civil servants."

In turn, Panteion University Professor and Secretary General of the Hellenic Bank Association Christos Gortsos said that the achievement of economic growth is not possible without the establishment of strong and stable institutions. "This includes stable rules that will be amended only in exceptional cases, without affecting the participants in economic life." In his words, serious reforms are required in the tax and the legal system, the latter being known for its extremely slow pace of justice, as well as in education, which lacks the connection with the labour market.

In view of the publications that the probable early parliamentary elections in Greece, which SYRIZA will possibly win, will cause a mass withdrawal of deposits, Gortsos said that until yesterday (18 December) there had been no such indications. "My information is that no withdrawal of deposits from the Greek banks had been established until noon. Of course, nobody knows what will happen next week, but there is no such trend for the time being."

At the same time, Greece has been thrown into a political fever, and the forthcoming two rounds of the presidential elections are provoking new shocks. Indicative of the serious situation is the fact that today former Prime Minister Konstantinos Mitsotakis is to meet with President Karolos Papoulias. The veteran politician will express to the President his concerns about the possible early elections and the negative implications on the economy at a time when the talks with Greece's creditors have not yet been completed.

A  photo from a previous meeting between Konstantinos Mitsotakis and Karolos Papoulias, source: amna.gr

Their meeting was agreed immediately after Konstantinos Mitsotakis’ meeting with party leader of Independent Greeks Panos Kamenos on Thursday. Despite the concerns that the early elections may cause Greece’s exit from the euro zone expressed by the former Prime Minister, Kamenos was adamant that they should take place.

A day later, at a time when all polls presented very low results for Independent Greeks, a second party member said that he had received a proposal for a bribe to the amount of 2-3 million euro to be persuaded to vote for the presidential candidate of the ruling coalition.

Photo: amna.gr

He is actor Pavlos Haikalis, who said that he had testified in the case last Saturday, submitting to the prosecutor’s office audio and video materials to prove his allegations. They are already in the hands of the police with the request to be technically processed in order to make clearer the sound and picture.

Tags: EconomyPoliticsGreek foreign debtReformsEarly electionsPolitical crisis
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