Gov­ern­ment warned over pol­icy mix

Par­lia­ment’s Bud­get Of­fice iden­ti­fies a se­ries of risks to Athens’s strat­egy, says re­forms are nec­es­sary

Kathimerini English - - Front Page - BY SOTIRIS NIKAS

Par­lia­ment’s Bud­get Of­fice warns of se­ri­ous risks to the Greek economy in its quar­terly re­port, say­ing that “the coun­try’s course is not se­cured.”

The re­port, pub­lished yes­ter­day, de­scribes the so­cial se­cu­rity sys­tem and the na­tional debt as be­ing “un­sus­tain­able,” adding that in­creases in taxes and con­tri­bu­tions are hav­ing a re­ces­sion­ary ef­fect. It calls on the gov­ern­ment to re­duce its pri­mary sur­plus tar­gets af­ter 2018 and says that the state is fail­ing to of­fer any form of se­cu­rity to em­ploy­ees.

The au­thors of the re­port re­fer to “po­lit­i­cal tricks” that raise ob­sta­cles to re­forms and pri­va­ti­za­tions de­manded by the coun­try’s cred­i­tors, and stress that the only route for a re­turn to growth is the suc­cess of the third bailout pro­gram.

The re­port makes par­tic­u­lar ref­er­ence to the re­form of the labor mar­ket that is slated to be­gin af­ter the sum­mer and the changes al­ready im­ple- mented on tax­a­tion and so­cial se­cu­rity con­tri­bu­tions. On the labor is­sues, it notes that hampering the flex­i­bil­ity of en­ter­prises does noth­ing in the way of of­fer­ing more se­cu­rity to work­ers or in bring­ing new em­ploy­ees to pro­duc­tion. What the state can do is of­fer a safety net for em­ploy­ees, it stresses.

On tax hikes, Par­lia­ment’s econ­o­mists say that be­sides the re­ces­sion­ary con­se­quences, “they put into doubt the achieve­ment of the fis­cal tar­gets, thereby gen­er­at­ing a new cy- cle of un­cer­tainty.” The tax and con­tri­bu­tion hikes also “do not help the coun­try re­store its com­pet­i­tive­ness, both in the in­crease of ex­ports and in at­tract­ing new in­vest­ment.”

The au­thors ar­gue that a re­bound of the economy is not in sight, as con­sump­tion, ex­ports and in­vest­ments were on a down­ward course in the first half of the year. The re­cov­ery of the economy, more­over, will be hard to at­tain due to the pol­icy mix of the new pro­gram, as tax mea­sures may pay off in the short-term but the much-needed re­forms will take time to count, they say.

In­vest­ments, the au­thors note, are go­ing down and hu­man re­sources be­ing de­val­ued, while the bud­get may suf­fer the im­pact of the new au­to­matic sys­tem of ex­pen­di­ture re­duc­tion.

An­other prob­lem they see is that re­ac­tions to re­forms con­tinue and re­sult in more un­cer­tainty, adding the as-yet-un­known im­pact of the Bri­tish de­ci­sion to exit the Euro­pean Union and the at­tempted coup in Turkey.

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