ECONOMY

Greek State wastes billions of euros, ECB study finds

A European Central Bank study shows that the Greek State is wasting money due to red tape, inefficient administration and the phenomena of corruption. The ECB study, reprinted by the Federation of Greek Industries (SEV) in its competitiveness bulletin, shows that, in 2000, the Greek State paid 39 percent more for public projects. As a result, there was an annual waste of 15.73 billion euros which could have been used for other expenditures. The ECB study compares state sector efficiency in 23 countries. Greece, unsurprisingly, comes last in efficiency. According to the study, the best use of state resources is made by Luxembourg, Japan, the Netherlands and Austria. The study shows that the smaller the participation of the state sector in the country’s gross domestic product, the more efficient the allocation of resources usually is. The study divides the states into three groups: low state presence (state sector up to 40 percent of GDP), medium (between 40 and 50 percent of GDP) and high (over 50 percent). On the average, states in the first category were 27 percent more efficient than those in the third category. The sectors studied are administration (with the contributing factors being corruption, bureaucracy, equity and the gray economy), education (percentage of participation in education, results achieved), health (life expectancy, infant mortality), public infrastructure (quality of transport and communications), income distribution (percentage of income owned by the poorest 40 percent), stability (GDP growth fluctuation, inflation) and economic achievement (per capita GDP, GDP growth rate, unemployment rate). Surprisingly, Greece gets very good marks for education, where allocation is more than twice as efficient as its average. The result does not mean that it spends enough on education but that the money it spends achieves good results. Greece gets poor marks in administration, due to red tape and corruption; in infrastructure, because of the relatively low quality of transport and communications; in stability, because of relatively high inflation and a volatile GDP growth rate; and in overall economic results. The study’s authors, ECB economists Antonio Afonso, Ludger Suknecht and Vito Tanzi warn that their results are indicative and that there is great difficulty in comparing one country to another and in estimating the impact of spending on state finances and social welfare.