Provopoulos: Success Of Greece's Consolidation Not Yet Assured
First Published Monday, 18 October 2010 06:42 pm -
ATHENS (MNI) - The success of Greece's fiscal consolidation program is not yet guaranteed and will depend on the strict adoption of austerity measures, improving competitiveness and the launch of an ambitious growth plan, ECB Governing Council member George Provopoulos said Monday.
The Greek economy is in the midst of a big, unprecedented effort, which could mark a new course toward stronger growth, the governor of the Bank of Greece said at a tourism conference here.
However, this goal is not yet assured, Provopoulos cautioned. "Everything will depend on the consistency and continuity of economic policy and the participation of all productive groups in the fiscal effort.
Three conditions must be fulfilled, he said: First is the detailed application of fiscal and structural reform targets. Without them, there cannot be growth and progress. Second is the expansion of the countrys growth potential via a complete growth plan. Third is the mobilization of business groups which must now look beyond the crisis and undertake bold initiatives.
After over a year in power, the Socialist government has yet to launch the much awaited growth plan. The European Commission, the ECB and the IMF, which agreed a E110 billion loan for Greece last May, have been pushing for the announcement of the plan.
A cabinet reshuffle last month, which resulted in the substitution of the development and growth minister, has delayed plans.
The central banker said that the crisis revealed the failure of a growth model which led to large government and current account deficits and major structural problems. Since joining EMU, the current account deficit has soared and competitiveness has eroded by 20-25%, he noted.
Greece must emerge from the crisis in a global environment with complex challenges, he said, since global growth "will slow down in 2011 in both developed and developing countries.
Greeces biggest bet is to improve competitiveness, he argued.
Provopoulos indirectly hinted that Greece might need to revise the terms of the loan facility accorded by the EU and the IMF and seek new paths.
Within this uncertain global environment, we are called on to decide collectively what we want to achieve in the next years, to measure our capabilities, to choose ways that will lead us to the target," he said. "And most of all, to learn from our mistakes that led us into an extremely difficult position.
After the Greek finance minister admitted last week that there are unofficial talks for a grace period for the loan repayment, the local press has been publishing leaks daily, quoting unnamed government, European and IMF officials that the issue is under serious discussion.
Officially, both the Commission and the government have denied the reports. But the finance minister underlined that the talks cannot take official form, since this would undermine the fiscal efforts currently under way.
Nevertheless, IMF Managing Director Dominique Strauss-Kahn has stated that he is in favour of a grace period if accepted by the EU, which has financed the bulk of the loan.
(automatedtrader.net)
