From Indecision to Fast-track Privatisations: Can Greece Still Do It?

apostolos — Tue, 16 Apr 2019 22:25:09 +0000

This paper explains how the collapse of growth after 2008, in combination with soaring public and external deficits, led to the escalation of Greek debt, while the government’s delay in responding to the crisis increased the cost of borrowing and necessitated the bail-out agreement with the IMF and the European Union. One year later, Greece is struggling to harness fiscal deficits amidst a deep recession and rising social tension. Debt sustainability has not yet been ensured and another tranche of loans has been negotiated under new terms and conditions, including higher taxes and extensive privatisations of public companies and property. The paper discusses the main failures of the bail-out agreement and why the lack of growth so far has undermined efforts at stabilisation. As an alternative, the paper suggests that with a modest return to growth, combined with fast-track privatisations, the prospects of debt sustainability improve substantially. In light of the recent debate on the European Stability Mechanism, the paper suggests that the bail-out facility should avoid the debt seniority condition, so that Greece could return to normal market borrowing after 2013 without raising new fears of ‘haircuts’ on private sector obligations

EMU and the Greek Crisis: The Political-Economy Perspective

apostolos — Tue, 16 Apr 2019 22:25:07 +0000

We describe the political–economic environment that precipitated the Greek crisis. Involved were collaborations between private interests and the formally elected and appointed custodians of the public interest, and a captured politicized government bureaucracy. The confluence of these forces resulted in the pilfering of public funds, rampant tax evasion, and deterioration in the quality of publicly provided goods. From a macroeconomic perspective, the failure of successive Greek governments to reverse the decline in the national saving rate, and not the government budget deficit per se, was the main reason for the crisis. There was misrepresentation of official Greek national statistics but the inability or unwillingness of EMU authorities to react to visible portents of Greek failure, such as ongoing large current account deficits that were not hidden by “Greek statistics”, exposes a major fault line in the EMU’s design and implementation through the Stability and Growth Pact.

fiscal policy – To Archeio

From Indecision to Fast-track Privatisations: Can Greece Still Do It?

EMU and the Greek Crisis: The Political-Economy Perspective