OECD urges bolder action
The Organization for Economic Cooperation and Development (OECD) yesterday added its voice to the European Commission as it urged Greece to be more ambitious in the scale of its structural reforms. A day earlier, Brussels advised Greece to take advantage of its current buoyant growth and speed up reforms. It identified budgetary policy, the labor and product markets as areas that needed further improvement. The Paris-based OECD had much the same to say, although it went further with its stress on greater ambitions and bolder reforms. The think tank, in its economic outlook for member countries released yesterday, advocated a «more ambitious» fiscal policy for Greece and said that the government should rein in primary expenditure in order «to reduce the still-high debt ratio.» Greek debt to gross domestic product fell below 100 percent last year and is projected to fall further to 97.3 percent of GDP this year. The government focus thus far has been on boosting revenues rather than cutting spending, although last week it indicated that it would adopt a stricter policy on expenditure in next year’s budget, linking it to objectives and their usefulness. The OECD also called for further action in removing labor market rigidities and opening up network industries as key to bringing Greek incomes closer to European Union levels without raising the specter of high inflation. Equally important, the state should implement «bold reforms of the pension system and public sector management.» The think tank noted that Greek economic growth is expected to grow by 3.5 percent this year, improving to 4.2 percent in 2003. It predicted consumer price inflation coming in at 3.4 percent this year but abating to 2.9 percent next year.
