PASOK MPs level stinging criticism over economic policy

Stinging criticism of government shortcomings was voiced by ruling PASOK party MPs during a stormy session of the party's Parliamentary Work Sector for economics on Tuesday, which ran over the scheduled time and led to PASOK's Political Council being postponed until the following day.
Addressing the meeting, Finance Minister George Papaconstantinou denied that the government's economic policy had "failed" but admitted to delays and some mistakes. He noted that in order to receive the fifth tranche of the loans agreed with the IMF and European Union countries, Greece had to show "that it is doing something" and also referred to pressures to carry out privatisations.

Among the harshest critics were Vasso Papandreou, a former minister under the PASOK government of Costas Simitis and one-time European Commissioner for Greece. Papandreou pressed the finance minister to reveal what had been done in terms of suing speculators suspected of abusing the system in order to manipulate markets and stressed that the current policy of "expensive lending for a poor country leads nowhere".
She challenged Papaconstantinou to "tell people the truth, that their standard of living will drop by 30 percent".
The MP was also scathing about the government's 'opengov' system, describing it as a 'smokescreen' to cover up the choices of the government's cronies.

Another former minister, Costas Geitonas, said the prime minister and president had not tried hard enough to push for a consensus between the political parties on the measures to be adopted and said the government "appears to have lost the communications game".

Others stressed that the policy of squeezing people for more and more taxes had only resulted in emptying bank accounts and filling public squares with armies of 'discontented and disoriented' citizens.

Finmin's reply to MPs

Responding to the criticism, Papaconstantinou distributed a lengthy circular outlining the course of the economy over the past 20 months and details about the Medium-Term Fiscal Strategy to the 90-odd MPs participating in Tuesday's meeting.

He stressed that those resorting to "easy criticism" of the government and questioning its credibility were "unaware of crucial variables" that he listed as "uncertainty in the international economic firmament, instability in markets and backtracking of European policy".

In the circular, Papaconstantinou explained why additional measures amounting to 6.4 billion euro had been necessary in 2011, blaming them on initial underestimates of the original deficit (2.5 billion euro), the recession (1 billion euro), lower-than-estimated tax revenues (1.7 billion euro) and 1.2 billion euro from a re-evaluation of the impact of measures.

The minister emphasised that tackling tax evasion was the linchpin of government policy while noting that no country had ever solved these problems overnight. He also denied that there was a failure in terms of raising revenues, which he said had increased by 5 billion euro in 2010.

Outlining the targets of the Medium-Term Fiscal Strategy, the minister said that this included a  reduction in public-sector payroll costs by 2 percent of GDP through streamlining and reduction of staff in the public sector, a 20 percent reduction in defence spending, an increase in the profits of public utility companies by 1.5 billion euro and savings of 1.6 billion euro through cost-cutting in health and pharmaceuticals speding.

A further three billion euro are expected to arise by combatting tax evasion and a further 6 billion euro from widening the tax base through direct and indirect taxation, he added.

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