BUSINESS

Another warning for the gov’t on the economy

TAGS: Finance

In its annual report delivered to House Speaker Nikos Voutsis on Friday, the Parliamentary Budget Office issued a clear warning to the government that the economy needs its help if it is to recover.

“Unless uncertainty regarding the course of future policy is eliminated and the governance rules change, the economy will not recover,” the report states.

It also attributes great significance to the implementation of essential reforms, highlighting that 2017 has begun “with new delays in the application of the program,” pointing to another difficult year ahead.

On the reforms in the program, the Budget Office economists estimate that “they lay the foundations for averting the consolidation of a situation dominated by an increasing burden on the private sector, a reduction of incomes in the public sector, limited capital flows, the exodus of educated young people and malfunctioning state structures.”

The report addresses the issue of Greece’s debt by saying that “a permanent solution for its sustainability would eliminate an important factor of uncertainty regarding the future of the economy and investment prospects. It would also pave the way for the country’s participation in the European Central Bank’s quantitative easing program, reduce borrowing interest rates and facilitate [the country’s] return to the markets.”

In terms of the social security system, the report notes that “as long as the necessary reforms are postponed, the bill will keep growing,” and that “the margin for the fair distribution of the burden is diminished.”

The Budget Office also calls on the government to conduct an overhaul of state expenditure, demanding more systematic political interventions so as to save more money.

On taxation, it notes that the increase in tax rates discourages hard work and entrepreneurship and therefore dims hopes of a return to sustainable growth. “The constant tax hikes are sawing at the branch of production and the economy,” the report reads.

It further refers to labor issues, asking for legislative interventions regarding the process involved in calling a strike, company-specific collective labor contracts and others.

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