ECONOMY

BoG chief says bold structural reforms are the only option

Macroeconomic stability and the acceleration of structural reforms are the two key factors that can improve Greece’s international competitiveness, Bank of Greece Governor Nicholas Garganas said yesterday. Speaking at a conference on the subject in Athens yesterday, Garganas described the government’s recent indirect tax hikes as necessary for the country’s fiscal rehabilitation and adjustment to European realities, rejecting their description as «austerity measures.» «Greece has no other option but to implement reforms in order to achieve sustainable growth and real convergence (with the rest of the EU),» he said. Garganas argued that the structural changes must be pursued despite the difficulties and the cost involved. «The acceleration of structural reforms will allow a rise in employment and faster growth in productivity… Greece must actively pursue the European Union’s new proposals for improving productivity and apply measures aimed at the integration of the internal labor market,» he said. As such a measure, he cited the action plan for eliminating barriers in the services sector which, he said, can give a new boost to economic growth. The opening of the internal market to international competition would also improve competitiveness. «The difficulties involved in promoting the structural changes are only to be expected, and so we must adapt in order to face the challenges,» he said. Garganas added that protection should be offered to those likely to sustain negative impact from the changes, as well as incentives within a framework that will allow them to adapt smoothly to the inescapable changes in lifestyle and work. He forecast 3.3 percent rates for both Greek economic growth and inflation this year. He stressed that prices in Greece are rising faster than in other EU countries, noting that countries with a high price level will face problems in employment and growth.