Greece’s botched res­cue is frus­trat­ing to be­hold: Lip­sky

The Pak Banker - - Front Page -


Ef­forts to res­cue Greece have failed to pro­vide the ba­sic struc­tural re­forms needed to help bring com­pet­i­tive­ness to its econ­omy, said John Lip­sky, the In­ter­na­tional Mone­tary Fund’s for­mer first deputy manag­ing di­rec­tor.

“It has been frus­trat­ing be­cause some of these have been clear from the out­set in so many ways,” Lip­sky said in an in­ter­view in Copen­hagen yes­ter­day. “I feel this process could have been han­dled so much bet­ter.”

Europe is pres­sur­ing Greece to step up ef­forts to rein in its deficit and dereg­u­late the econ­omy. The aus­ter­ity mea­sures are ex­ac­er­bat­ing the na­tion’s eco­nomic pain and won’t lay the foun­da­tion for a last­ing re­cov­ery, Lip­sky said. Greece is com­ply­ing with the terms set by euro-zone lead­ers in the hope of get­ting a 31 bil­lion-euro ($40 bil­lion) aid pay­ment this month to help re­cap- ital­ize its ail­ing banks. “It has been so frus­trat­ing to see how lit­tle the dis­cus­sion has cen­tered around what are in fact the un­der­ly­ing is­sues, the truly sem­i­nal is­sues, for Greece, which have been its pro­gres­sive loss of com­pet­i­tive­ness in the euro zone,” Lip­sky said. “If that can’t be reme­died, there will be no suc­cess­ful so­lu­tion for the Greek econ­omy, one way or an­other.”

Greece, which faces a sixth year of re­ces­sion, needs to re­move trade bar­ri­ers and be­come more ex­port-ori­ented to have any hope of re­turn­ing to growth, ac­cord­ing to Lip­sky.

“When you look at the very lim­ited de­gree, the as­ton­ish­ingly lim­ited amount of for­eign trade in Greece’s gross do­mes­tic prod­uct, con­sid­er­ing the tiny size of the coun­try, you re­al­ize one way or an­other that spe­cial in­ter­ests have been suc­cess­ful in keep­ing the Greek econ­omy out of the sin­gle mar­ket,” he said.

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