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Industrialists insist on a second debt restructuring

02 October 2012 / 15:10:41  GRReporter
2475 reads

Victoria Mindova

A new restructuring of the Greek debt is needed as well as the introduction of a single European policy to resolve the debt crisis according to the head of the Athens Chamber of Commerce and Industry, Konstatinos Mihalos. He stressed that Greece's debt has increased to over 166% of GDP. In 2014, it is expected to exceed 180% of GDP. "There is no economic theory arguing that a debt of that size is sustainable in a country with constant recession," the businessman was adamant. The country must make a turn in the policy pursued so far and focus on stimulating economic growth.
There should be a second haircut of the debt, Mihalos insists. He stresses that it should not be private investors who have to bear its burden, as was the case with the PSI process. "The debt reduction must come at the expense of the lenders’ Troika itself - the European Commission, the European Central Bank and the International Monetary Fund, which have imposed the wrong mix of policies in the last three years." If the European Union has adopted sustainable a debt not greater than 120% of GDP, let them allow us to restructure our debt to these levels, the head said at a press conference about the state of Greece in the period of fiscal adjustment.

Mihalos does not oppose the fiscal adjustment in general, but it should focus on the problem areas of the public sector rather than on the general impoverishment of the country. It requires policies that will focus on attracting new investors. Such policies are related to the reduction in corporate tax to 15%, the fight against tax evasion and facilitating administrative procedures.

According to the head of the Athens Chamber of Commerce and Industry, a denomination inside the Greek economy through a reduction of labour costs will not give the desired result. The developer believes that Bulgaria is an example of the failure of the policy that deliberately maintains low wages. Although the cost of labour is low, there is no concentration of investments in the country to develop sustainable production, Mihalos said.

An investor generally seeks to sell 70% of the production on the local market and to export only 30% of it. If the purchasing power of the country is low, the investors will focus on another market where there are prerequisites for greater success, Mihalos said.

Athens Chamber of Commerce and Industry presented its annual report on the attitudes of society in conjunction with the economic policy pursued. Eight out of ten Greeks are negative towards the development course of the local economy, the poll shows. There is a slight decrease in citizens’ pessimism compared with last year, but it is not crucial to change the negative attitude towards the reforms imposed by the Memorandum of financial support. In 2011, nine out of ten respondents were negative towards the developments in the economic life of Greece.

42% of respondents believe that Greece has made enough sacrifices to be allowed to loosen the fiscal adjustment measures. 32% of respondents are adamant that the Greek politicians are incompetent to negotiate with the lenders and are unable to protect the interests of the country.

Speaking to reporters after the press conference, Mihalos insisted that Greece is no longer in the unenviable position in which it was three years ago, at the beginning of the crisis. Larger euro zone countries such as Spain and Italy are also facing today serious problems in financing their deficits. Brussels should take care of the single solution to the debt crisis and Greece should be included in the new conditions. According to Konstantinos Mihalos, the country has serious allies in the talks, such as France, and must use its goodwill in the renegotiation of the terms of the recovery programme.

As far as domestic politics is concerned, the barometer shows that one in two believe that the fight against illegal trade and production is not a priority for the government, thus causing serious losses to the treasury. The local economy is losing billions from the informal economy, and this fact should not be overlooked any longer, the Chamber said.

Tags: EconomyMarketsIndustryKonstantinos MihalosDebt crisisLendersFinancial aidGreece
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