ECONOMY

IOBE insists local banks should not merge

The non-merger of local banks and the proposal of splitting the Public Power Corporation along the lines of Italy?s Enel are among the eight key reforms that form the blueprint for Greece?s exit from the crisis prepared by the Foundation for Economic and Industrial Research (IOBE).

The institute?s quarterly report calls for political consensus on the eight pillars proposed, with the first being a 10-year growth program including an emphasis on sectors with a comparative advantage.

The second concerns the gradual reduction of the fiscal deficit below 2 percent of gross domestic product in 2015, mostly through cutting expenditure and containing tax evasion, as opposed to imposing more taxes.

Broad-scale privatizations and use of state properties, even in the agricultural sector, form the third pillar, which includes breaking down PPC into subsidiary companies.

IOBE further proposes measures for bolstering cash flow in the market, with the use of European Union funds, while warning against the merging of domestic lenders as that could reduce liquidity in the economy at such a crucial juncture.

The counterincentives for entrepreneurship and investment must be lifted, IOBE states, estimating that this could benefit the economy with a 17 percent increase to GDP. The institute says there ought to be some very flexible concession contracts for roads, airports, ports, marinas etc.

Finally, it says the labor market must become more flexible, justice must act faster, particularly on tax evasion cases, and the civil service will need to appoint permanent general secretaries or deputy ministers.