FRANKFURT (MNI) – Greece must rapidly implement reforms and
privatize state-owned assets in addition to addressing tax evasion, Bank
of Greece Governor George Provopoulos said in an op-ed piece published
late Monday by the Financial Times.
Provopoulos wrote that fiscal adjustment should aim to limit
government’s contribution to GDP and thus give rise to a competitive
export sector.
“Greece has to move fast to implement bold structural reforms,
far-reaching privatisation and effective measures to combat tax
evasion,” he said.
“Fiscal adjustment should involve two-thirds expenditure cuts, so
that the share of government spending in national output is reduced,
allowing a competitive export sector to flourish,” he continued. “As
growth resumes and tax collections rise, many of the recent tax rises
can then be reversed.”
The last program of consolidation and reform was implemented slowly
and inefficiently, while an over-reliance on tax increases relative to
spending cuts was an unfortunate choice that has restrained investment
and consumption, Provopoulos criticized.
Although consolidation would not have been easy in any event,
problems implementing reforms, selling state-owned property and curbing
tax evasion “have exacerbated the unavoidable pain,” he said.
“As a result of these difficulties, the fiscal adjustment has led
to a greater economic contraction than initially projected because, for
a programme to be effective, all the interconnected parts must be in
place.”
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
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