The Greek economy remains in an extremely crucial condition after the country entered a support mechanism in May 2010, a report by the Institute for Economic and Industrial Research (IOBE) said on Tuesday. IOBE said that although implementation of the 2010 treaty was generally successful, with the fiscal deficit cut by 5.0 pct of GDP and measures ensuring the sustainability of the social insurance system, developments this year were a cause of concern. The Institute stressed that achieving the Medium-Term program’s targets was the safest way to lead Greece away from the zone of an uncontrolled default, which could dramatically lower the country’s living standards and particularly hit lower incomes. These targets are feasible because the public sector enjoys underdeveloped assets, mainly property, of a greater value (as a percentage of GDP) compared with any other Eurozone state. These property assets could become a catalyst for lower the debt to GDP ratio and for economic growth by attracting domestic and foreign investors.
Also, recording primary budget surpluses between 3-4 pct of GDP were not something new to Greece, as they appeared again in the 1990s. Another positive factor was that Greece offers great investment opportunities (national roads, ports, marinas, airports, holiday homes, energy networks, renewable energy sources, minerals and the primary sector. The country also can speed up absorption of EU funds worth 15 billion euros, which combined with European Investment Bank funds could boost economic growth. IOBE stressed that deregulating the most closed economy of the OECD to competition forces and abolishing all counter-incentives to business activity and investments could create a growth dynamism and new job positions in the medium-term. Greece also has the unprecedented support of the Eurozone, the IMF and the ECB.
IOBE said the country needed a 10-year development program, to gradually cut its fiscal deficit below 2.0 pct of GDP by 2015 through cutting spending and the size of the state, lower payroll costs in the general government and limiting tax breaks and tax evasion.
The Institute also called for a wide-range program of privatizations and exploitation of the state property assets and said urgent measures were needed to boost liquidity in the economy and abolishing counter-incentives to business activity and investments.