Thus, Greece saw a major internal devaluation,
which affected the workers’ standards of living,
albeit without improving the competitiveness of
the Greek economy. This failure is corroborated
by the growth of exports, which usually is a sign
of competitiveness; despite the squeeze on
wages, export performance did not improve
enough to offset the recessionary effect of fiscal
adjustment. For comparison purposes, it should
be noted that in the five-years after the outbreak of
the crisis in Portugal, exports grew substantially,
offering a push of almost 9% to the economy. This
push never existed in the case of Greece. The
only thing that existed was the struggle of Greek
exporters to overcome the distortions that under-
mine the competitiveness of Greek products and
services, such as red tape, energy costs, high
non-wage labour costs, and the over-regulation of
markets.
Thus, in order for Greece to make the next step
forward and enter the global capital markets, all
sides must gallantly recognise their mistakes and
take the necessary corrective action.
The delays in the completion of the second
review of the third adjustment programme are the
greatest obstacle to the recovery of the Greek
economy. And as long as this matter remains
pending, the Greek economy is saddled with
more and more problems. We can already see
pressures mounting on Greek bonds, the prices
of which have returned to October 2016 levels.
The market is still plagued by uncertainty, which
hinders investment decisions and postpones the
restoration of confidence in the Greek economy,
while we are still a long way from Greece’s entry
to the European Central Bank’s quantitative eas-
ing programme – on which many of the estimates
for positive growth in 2017 were based.
Given the current discord among its lenders,
Greece is called to propose a compromise solu-
tion, which would include a mutually acceptable
proposal regarding primary budget surpluses
after 2018.
This proposal may be accompanied by certain
measures, aimed at persuading Greece’s lenders
that the country will make structural changes in its
fiscal policies, which will stabilise economic indi-
cators on the long term and will avert the creation
of new “black holes”.
Such a proposal could be the commitment to a
primary surplus amounting to 2.5% of GDP in
2018, and the adoption of measures aimed at
reducing the tax burden for enterprises by 1% of
GDP, which would enhance Greek production,
thus jump-starting economic growth.
First of all, of course, it has to be made clear
whether Greece’s European partners can coexist
with the IMF and its exaggerated demands or if
the Greek programme will be continued, either
without the IMF, which, anyway, has not been
financing Greece in the past few years, or with the
IMF in the role of advisor or observer. In any case,
all sides must make an effort to reach a compro-
mise, in order to break the current deadlock.
Given that countries such as Germany and
France are in a pre-election phase, any further
delay will merely make it more difficult to find a
mutually acceptable solution.
Trade with Greece
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