Greece has not exhausted all its weaponry to surrender to a default and its consequences, the Institute for Economic and Industrial Research (IOBE) said on Thursday.
In its quarterly report on the Greek economy, IOBE presented two scenarios for exiting the crisis and noted that a detailed information of all citizens should have been underway over the two options and mainly over the costs and the benefits of each one.
The Institute, in its report, said that approval of a Mid-term Plan by Parliament did not ensure its success since its implementation depended on a series of domestic policies and organizing parameters, such as implementing an ambitious but feasible program of privatizations and exploitation of state property worth 50 billion euros by 2015, a catalyst for cutting the public debt below 130 pct of GDP by 2015. It also depended on the stance of Greece’s partners in the Eurozone, the ECB, the IMF and generally markets.
Under the two scenarios offered by the troika, the Eurozone, the ECB and the IMF will take over the refinancing of Greece’s existing public debt on the precondition that the country’s general government deficit will fall below 2 pct of GDP by 2015 and implement privatizations worth 50 billion euros. This proposal rejects any credit event and envisages that more than 2/3 of Greek debt will be held by ECB and the European Stability Mechanism.
IOBE presented its proposal for exiting the crisis, which focuses on adopting a 10-year growth program, gradually reducing the fiscal deficit below 2 pct of GDP by 2015 mainly through limiting spending and combating tax evasion, promoting wide-spread reforms and privatizations, adopting measures to boost liquidity in the economy, lifting all hurdles in business activity, implementing flexibility in labor markets, establishing permanent job positions for secretary-generals or deputy ministers in the civil administration and accelerating justice.
IOBE estimates that the Greek economy will shrink by 4 pct this year, unemployment will rise to 16.5 pct and the inflation rate will average 3.3 pct in 2011.