Financial News: IOBE seminar: 'Troika'-mandated reforms only way to exit punishing econ crisis

Implementing reforms agreed to with the EC-ECB-IMF "troika" is necessary to help the country exit the current deep economic crisis was the leitmotif of a seminar organised on Monday by the Institute for Economic and Industrial Research (IOBE), entitled “Economic Crisis and Governance”.
Addressing the seminar, IOBE president Mihail Kortesis said the country was currently experiencing an unprecedented situation, “a multi-sided crisis that has highlighted the deeper roots of evil; a society driven by fear, without a vision; a faint-hearted political world, without a clear target, and an institutional system malfunctioning, untrustworthy”.

Kortesis said the situation was exceptional and that the main challenges facing the country should focus on competitiveness - a top national priority, as he said -- a new role for the state, balanced economic growth and a educational system adjusted to these changes.

“To achieve these goals we must urgently put forward a transition process from the state to the private sector, from protection to competitiveness, from collective inaction to individual initiative, from overspending to efficiency, from closed sectors to an open economy,” he noted.

Kortesis said this transition demands overcoming strong resistance by vested and special interest groups.
Yiannis Stournaras, IOBE’s managing director, underlined the need to save 23 billion euros to cut the country’s fiscal deficit in the next three years and stressed there were economic sectors which could easily attract investments. Stournaras said that opening up markets and professions in the country could boost the country’s GDP by 17 pct, the employment by 5.0 pct and exports by 10.5 pct.

He noted, however, that a new growth model was necessary for the country and stressed that time is running out for Greece, as delays in reforms and significant diversions from a fiscal consolidation program were already visible.

“To achieve, more than anything else it is necessary to have the right governance structure,” Stournaras said.
Mario Blejer, a former vice-president of the Bank of Argentina, said the two countries “were not moving along parallel roads”, and stressed that loss of competitiveness and inconsistency in fiscal deficits were the major problems for his country, while he noted that Argentina focused on privatisations to deal with the crisis.

Hasan Ersel, a professor and former vice-president of the Bank of Turkey, also addressed the seminar, stressing that: “When you don’t know what to do, the best thing to do is to do your best”, adding that in periods of crises, psychology plays a very important role.

Commenting on a crisis that hit Turkey in 2001 and 2008, he noted that Turkey managed to implement a socially-painful and politically-risky programme without large social reactions.

Finally, Luís Campos e Cunha, Portugal’s former finance minister, underlined that Turkey, Argentina, Portugal and Greece have great differences and no safe conclusions could be derived from the aforementioned crises.

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