World Bank’s Timmer urges longer-term view in Greek talks
The Greek government and its creditors should focus on the overhaul of its economy in order to escape the distracting “blame game” over its finances, the World Bank’s chief economist for the region said on Monday.
Greece must concentrate on improving the efficiency of government, the social security system and the investment climate, goals which have sometimes slipped from view as Prime Minister Alexis Tsipras’s cabinet negotiates with its lenders, said Hans Timmer, the Washington-based bank’s chief economist for Europe and central Asia, in an interview in Dubrovnik, Croatia.
Greece, which became the first country to defer a payment to the International Monetary Fund since the 1980s last week, is facing more urgent diplomacy in the European Union to free up bailout aid and avert a potential default. Tsipras has insisted aid must be on his terms, an affront for governments whose taxpayers have forked out billions in the past five years to keep Greece in the euro.
“The exit of Greece from the euro would be unprecedented, and it’s difficult to imagine what the impact would be,” Timmer said. “It would be a bad scenario, but other scenarios, of Greece staying in the euro zone, are also very bad, if the focus doesn’t shift to reforms.”
Public Opinion
The World Bank, which helps developing nations combat poverty, has also been advising Greece and fellow euro area member Cyprus on how to strengthen their economies.
By moving away from the “short-term” story and highlighting the economic rejuvenation made possible by the aid, the changes would become more palatable for voters in Greece and in creditor nations, Timmer said.
“This is not a problem of austerity, if you see how much money was spent on Greece by the IMF and others to support it,” Timmer said. “There would be a lot more realism in public opinion in Greece and there would be more sympathy from the outside to help them solve these problems if the focus were to shift.”
[Bloomberg]
