High unemployment and the lack of cash in the market that would have supported small and medium-sized enterprises are the main problems of the Greek economy, which, according to European Commission estimates, “will stabilize in 2014 and revert to a positive growth rate.”
Despite encouraging signs of stabilization, the situation remains difficult for Greek citizens mainly due to the high jobless rate, noted European Economic and Monetary Affairs Commissioner Olli Rehn on the occasion of the publication of the report by the Task Force in Greece on Tuesday. The report highlights the progress the country has made, but also notes the lagging of a series of key sectors in the Greek economy.
“The credit crunch is identified as one of the most important obstacles, which remains in place despite the recapitalization of the banking system, so that the channeling of liquidity continues to undergo significant restrictions,” a top-level European Union official stated while commenting on the report’s findings.
The liquidity problem is growing due to high interest rates, the high collateral required and the growth of nonperforming loans in the banking sector. In its report, the Task Force examines solutions for these problems and proposes the use of certain instruments, which include the Institute for Growth to be partly funded by EU subsidies, and the capacity for some funding from outside the banking system. Greece will have to issue its response to these issues in the coming period.
Regarding the delayed reforms for the improvement of the business environment and the facilitation of exports, the Task Force report also calls on Athens to stop preparing for actions and proceed with their implementation.
The report praises the tax administration for becoming more efficient, noting that the number of taxpayers of high significance who have been inspected has doubled in the last seven months.
The head of the Task Force, Horst Reichenbach, noted that the technical assistance his team supplied has been crucial in the creation of new structures for managing public finances and tax administration.