Post-crisis economy needs reforms

IOBE urges changes to public fund management; improvements coming in October, says finance minister

Greece’s economic policy needs to focus on fiscal adjustments, improving the financial system and reversing the decline in the country’s competitiveness in order to better prepare for the post-crisis environment, the Foundation for Economic and Industrial Research (IOBE) said yesterday.

IOBE, a nonprofit research group, said these proposals could contain the negative impact of the downturn and also help to create more favorable conditions for an economic recovery. “For this to happen, we need to understand that we can no longer rely on the practices adopted in the past but need to seek a new avenue for growth,” IOBE president Michail Kortesis said.

IOBE proposed a gradual reduction in government spending by better organizing and controlling costs in the public sector while also suggesting boosting budget revenues through more effective tax collection methods, such as setting up shared electronic databases.

Economy and Finance Minister Yiannis Papathanassiou said yesterday the government is working on “long-term and structural measures” to be unveiled in October aimed at cornering tax cheats and limiting public sector spending.

“We are working on a new generation of cross checks from different sources and improving electronic links between companies to stop the use of fake invoices,” said the minister.

IOBE also said measures are needed to help improve the country’s financial system, including strengthening the Bank of Greece’s supervisory role and giving the Capital Market Commission more independence.

Turning to the subject of competitiveness, IOBE called for the opening of regulated professions, attracting private sector management staff to government services and getting rid of complex legal procedures.

A recent study from Lausanne-based business school the International Institute for Management Development (IMD) showed that Greece has fallen 10 places to position No 52 on a world competitiveness report for the year 2009, and ranks in one of the lowest positions occupied by an EU country.