The difficult puzzle of Greek structural reforms
by Alberto Paez and Miguel Coelho (March 11, 2016)
Greece's European counterparts, i.e. the European Commission, the ECB and the ESM, have different opinions on the efficiency of the reforms. Between these institutions we find subgroups, composed by Commissioners and high-ranked officials, that either support and endorse government's reforms or prefer to add further pressure, stating that much more has to be done and that so far the reform agenda is trivial. The IMF has its own stance, preferring to spread its concerns over additional measures that might be necessary -- measures that have not been agreed in July.
Truth is that the Greek government has made an impeccable progress, in a very short period of time, and in the midst of a warlike atmosphere construed by the opposition and certain circles in the EU that want the bailout to fail, Greece and its economy to remain stagnant, causing political instability.
Structural reforms have covered almost all areas of the economy, the public administration, the way bureaucracy runs. The aim is to bring back credibility to the public sector, create a client-friendly environment, provide better services, enhance trust of investors to the domestic economy.
Critical for the Greek government is to protect the most vulnerable social groups and low-income households. At the same, there is an effort to rationalize taxation based on annual income. This will take time as it entails the creation of a national fortune registry to better associate annual income stemming from wage income, rents, or other assets. In this respect, the Ministry of Justice along with a number of agencies are assigned with the fight against tax evasion. The chase of tax evaders is going pretty well, yielding results and bringing in income to public funds. Coping with tax evasion is connected with the fortune registry; and here is where the government aims at emphasizing in the coming months.
No other Eurozone member-state has ever implemented so many crucial reforms within such a short period of time, though someone could hardly find a country in Eurozone with such a dysfunctional state and such a corrupted political elite. The previous political establishment left behind decades of chaos.
The institutions should acknowledge the progress made by the Greek government and conclude with the first review of the programme. Overcoming this step is essential for the domestic economy, the political stability in Greece, the wider stability in Eurozone.
Alberto Paez and Miguel Coelho are Policy Analysts at Bridging Europe
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