ECONOMY

Stick to reforms plan, urges OECD

The Organization for Economic Cooperation and Development (OECD) warned the Greek government yesterday against deviating from its reforms program, saying that it is vital to getting the economy back on its feet. «Deep and sustained fiscal consolidation, coupled with structural reforms, are key to restoring confidence and growth,» the think tank said in a global economic outlook report released yesterday. After recently raising taxes and slashing spending as part of efforts to save 30 billion euros over the next three years, the Greek government is in the process of finalizing social security reforms expected to be submitted to Parliament in the first 10 days of June. Recent polls show the popularity of Prime Minister George Papandreou has fallen since the measures were announced with the vast majority of Greeks labeling reforms as being unfair. The Paris-based organization is slightly more upbeat than the Greek government on the country’s anticipated economic course over the next two years. The OECD predicts the economy to contract by an annual pace of 3.7 percent this year, versus the government’s forecast for negative gross domestic product of 4 percent. For 2011, it sees a contraction rate of 2.5 percent year-on-year, marginally better than the government’s negative 2.6 percent GDP estimate. «The Greek economy is in a protracted recession in the wake of the global recession as needed fiscal austerity measures take hold,» it said. Commenting on the recent deal between the European Union and the International Monetary Fund worth 110 billion euros, the OECD said the agreement «enhanced the credibility of fiscal adjustment, which should lower borrowing costs and stabilize the level of public debt.» On the job front, conditions are seen as steadily worsening on plummeting private and government consumption. Unemployment is tipped to hit 14.3 percent next year, up from an expected 12.1 percent in 2010. An improvement in external demand is the only bright spot on the forecast, lifting export growth for the next two years by between 3.3 percent to 5.9 percent. [email protected]