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Yannis Stournaras: The joining of Bulgaria in the euro zone will be beneficial for everybody

22 January 2010 / 23:01:02  GRReporter
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            - Look the ideal case would be to immediately start the cuts in the public expenses. This in a public-social plan is not possible! We cannot turn back the policy of the previous government which at the time of its management hired over 50 thousand public employees. It is not possible for the new government now to lay off these 50 thousand people in order to cut the public expenses. So we are left with the collection of income from taxes as an emergency measure. The main goal is one – to decrease the national deficit. All possible means for the achievement of this goal are necessary and this includes the increase of the taxes. In its nature the problem of Greece is not in the current recession, but the lack of trust of our international partners.

According to the program for stability and development the positive economic growth will be registered at the end of 2011. Until then the national deficit has to decrease from 12,7% of the GDP to 5,6%. Is it possible to decrease the national deficit in a period of negative economic growth as it is stipulated by the current government of PASOK?

- The program for stability and development contains all the necessary instruments to decrease the national deficit. Unfortunately we have to be decisive and regardless of the negative economic growth we have to immediately start its execution. Even if the deficit does not decrease to the stipulated 8,7% of the GDP by the end of the year it is of great importance to register an improvement in very short terms. We do not have the necessary conditions to wait for a positive growth of the economy in order to take actions.

How will this affect the everyday life of the normal Greek citizens?

- Compared to the current life style, some restrictions might be necessary, however we have no other choice. Like they say for many years the Greeks have had a life style, which in its nature they could not afford.

Greece traditionally is a country which has a well developed tourism and merchant marine. What could the government do to stimulated the entrepreneurs in these two sectors in order for them to help the Greek economy out of the recession?

- There is a lot of space for development especially in the field of tourism in Greece. There are great possibilities for improvement of the services we offer and the tourist packages. The idea is not to limit the tourist business at the sea side and the beaches for few months a year, but to utilize the full capabilities of the country – nature and culture. In respect to the merchant marine the market there is quite opened, however there is more to be done. For example with respect to the reinforcement of the tourism in the whole year (not just in the summer months) we could work in the direction of the development of seasonal programs, which will allow competitive prices of the tickets for the winter season.

What are your expectations and recommendations as an economic expert for the execution of the program for rehabilitation of the local economy?

- My expectations are of consistent, stable and conscious application of the stipulated in the Program for stability and development measures. I expect from the government to show determination and not to “back up” because of fear from the political price they have to pay! I am confident that it is in our powers to deal with the economic situation today. We live in a time, which gives us the opportunity for a new progress by ending the crisis.  

In the press are published amounts of billions of euro which are already drawn from the banks and directed towards countries like Cyprus and Bulgaria. What do you think could the government do not just to attract more foreign investments, but to also keep the funds that are already in Greece?

- I believe that dumping in the corporate taxation is not beneficial for the countries of the European Union. In their essence the countries could not function correctly with too low income from the taxes. What could on the other hand be done by the government in order to attract new investors is to remove many administrative procedures which have grown morally old in the age of the internet and communications. They make the access of the foreign investments to Greece excessively heavy. A centre of the type one-stop-shop could be created which will have as main activity to issue licenses and permissions for the foreign companies to carry out their activities within the borders of Greece. In regards to the Greeks who export their deposits outside the borders of Greece I believe they are making a tragic mistake. At the end of the day they would be losing money, not saving them. This is true because currently the Greek banking system is stable, while the banks abroad are at risk.

How will the recession in Greece affect the economies of countries like Bulgaria and Romania who are directly dependant on the amount of the Greek investments?

- There is a chain of related to each others’ activities and results of them so that all the countries are more or less affected by the world economic crisis. Of course currently we are witnessing a progress in an international plan so Greece has to undertake the necessary actions for restoration of the trust of the world markets. It plays an important role on the Balkans and the stabilization of the local economy will affect in a positive manner the productivity, employment and the volume of GDP of the countries in the region.

Is there a probability that the Greek banks draw back their funds from the Balkan countries?

- Definitely not! There is no such probability and if somebody does it, it would be a great mistake.

Tags: SocietyPoliticsEconomy
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