ECONOMY

Stark warning by Parliament’s Budget Office

The Parliamentary Budget Office issued a warning on Wednesday that there is no growth plan for the period after the bailout program ends. Its economists noted that the fiscal adjustment and reforms are being implemented in a constantly changing European and international environment, as if on “quicksand,” and criticized the political state of affairs in the country.

“The possibility of national elections on the pretext of the presidential election is pushing the country into a protracted pre-election period,” the Budget Office said in its quarterly report. It added that “regardless of that, the hesitation and the problems in the government’s reform strategy, the absence of a chartered growth policy and the unclear positions of the opposition are not helping to create a climate of stability in economic policy. As a result serious investments will be discouraged, as they always need a stable and therefore predictable political environment.”

On the issue of a new growth model, the Budget Office argued that “although the government acknowledges a return to the previous growth model would be impossible, it is not clearly stating with what measures, reforms and timetables it will form the conditions for outward growth.” It went on to brand the target that Athens has set for 2.9 percent growth in 2015 as “optimistic,” noting that “it is not clear how the numbers add up to 2.9 percent.”

The report further noted uncertainty on the fiscal results of the current year, due to “the pending economic policy issues, the course of tax revenues – such as whether the collection of 25 percent of new expired debts to the state will be achieved – and the state of the social security system. The problem is that the planning and replanning have no end in sight, feeding the general uncertainty, which in turn impairs growth,” the Budget Office pointed out.

It also stressed that the rhetoric on the “end of the memorandum,” as formed, “disregards the European environment and is associated with decisions [such as resorting to the markets for borrowing] that could generate a huge cost for an already weakened economy and stricter monitoring by the markets, which are not predictable.”

Either way, it argued, there will continue to be some form of monitoring, either by the markets or the European Union.