Overhauls in Greek markets, the economy and public administration are delivering results, the European Commission said Wednesday, signaling divisions among official creditors over the country’s progress.
“Greek public administration has continued significant rationalization of the workforce” the Commission’s Task Force said in its quarterly report on Greece published Wednesday in Brussels. The public sector wage bill as a percentage of gross domestic product is now below the Organization for Economic Cooperation and Development average, the commission said.
The commission, alongside its troika partners the European Central Bank and the International Monetary Fund, has been trying to transform Greek public policy after bailing out the country with low-yield loans totaling 240 billion euros ($323 billion) since 2010. The program of reforms affecting defense spending and health care, to forestry legislation and fresh milk is slowing as a return to the bond markets and an economic recovery embolden officials, the IMF said last month.
“Adjustment fatigue has set in,” IMF staff said in its latest review of the Greek economic adjustment program. “This is making it difficult to move forward boldly and swiftly with needed reforms.”
During a meeting of euro area finance ministers earlier this month, ECB president Mario Draghi raised concerns with the Greek Finance Minister Gikas Hardouvelis that Greece has relaxed its reform efforts.
The 60-strong task force was set up in 2011 to provide “exceptional technical assistance” to help Europe’s most- indebted state implement economic overhauls tied to the world’s biggest international bailout.
Exporters have reported a decrease of as much as 50 percent in the time they have to wait to clear customs and have cut their costs by between 20 percent and 50 percent in the past half year, the Task Force said in a press release today. Greece has also “achieved good progress” in improving its tax collection system, it said.
“Despite so much talk to the contrary, the truth is that Greece has implemented lots of reforms,” said Panos Tsakloglou, a professor at the Athens University of Economics and Business who was Greece’s representative in the working group of senior euro-area finance ministry officials until June. “The starting point was very low, and the full benefit of these reforms will only be seen once the economy starts picking up.”
As it struggles with 27 percent unemployment, the country has topped the league table for reform responsiveness among developed nations in the annual rankings of the OECD. Greece has further reduced cost of starting up a business and taxes on property transfers, the Commission said Wednesday.
The government will submit a bill which includes measures aimed at satisfying troika conditions for the disbursement of a delayed bailout sub-tranche later this week or next week, a spokesman for the country’s Finance Ministry said Tuesday. [Bloomberg]