OECD calls for an even tighter fiscal policy to bolster growth
Greece needs to further extend its real age of retirement and to abolish all kinds of tax exemptions, the Organization for Economic Cooperation and Development (OECD) has recommended in a report published on Monday, so that the growth rate accelerates, fiscal revenues expand and the national debt becomes sustainable.
Although the report, presented in Athens on the occasion of OECD Secretary-General Angel Gurria’s visit, does speak of a return to growth, it undercuts the official forecast for a 2.3 percent economic expansion this year, pointing instead to a 2 percent increase. It adds that a series of reforms could considerably strengthen gross domestic product in the future.
According to the OECD, a fouryear rise in the real age of retirement up to 2030 (instead of the already scheduled three-year rise to the age of 65 by the same year) will boost GDP by 10.4 percentage points (against 7.5 points with the scheduled extension).
The modernization of the public administration and the improvement of the justice system up to OECD standards by 2030 would have an even greater impact, the report says. That would signify a GDP impact of 25.6 percentage points, compared to the current plans for a 14.7 percentage-point increase.
The organization further recommends new reforms in the commodity markets so that they reach up to Belgium’s level by 2020, and an increase in family benefits to meet the European Union average by 2025.
In total, the reforms the OECD has proposed would bolster GDP by 46.1 percentage points or almost 100 billion euros per year, against 25.4 percentage points projected by the currently planned reforms. Those proposed reforms would also cut the national debt to just 100 percent of GDP by 2060, the report projects.