A Blueprint for Greece’s Recovery
Months of negotiations between Greece’s government and the International Monetary Fund, the European Union, and the European Central Bank have produced little progress. To break the current impasse, it is necessary to envisage a healthy Greek economy.
ATHENS – Months of negotiations between our government and the International Monetary Fund, the European Union, and the European Central Bank have produced little progress. One reason is that all sides are focusing too much on the strings to be attached to the next liquidity injection and not enough on a vision of how Greece can recover and develop sustainably. If we are to break the current impasse, we must envisage a healthy Greek economy.
Sustainable recovery requires synergistic reforms that unleash the country’s considerable potential by removing bottlenecks in several areas: productive investment, credit provision, innovation, competition, social security, public administration, the judiciary, the labor market, cultural production, and, last but not least, democratic governance.
Seven years of debt deflation, reinforced by the expectation of everlasting austerity, have decimated private and public investment and forced anxious, fragile banks to stop lending. With the government lacking fiscal room, and Greek banks burdened by non-performing loans, it is important to mobilize the state’s remaining assets and unclog the flow of bank credit to healthy parts of the private sector.