Economic perils

As the scores of holidaymakers flow back into the urban centers to shoulder the economic burden of another academic year, and as we move closer to Prime Minister Costas Simitis’s annual speech at the International Trade Fair in Thessaloniki, attention inevitably falls on the economy. The prospects for the future are dim. Despite the upbeat climate cultivated by the ruling Socialists in view of the coming elections, economic developments sound the alarm. Official data made public by the responsible authorities last week show that the public debt, one of the central indicators of Greece’s economic convergence with the rest of our European peers, is not only surpassing the ceiling set by the stability pact, but also exceeds the forecasts of the country’s state budget. In other words, neither austerity measures, which had an impact primarily on salaried workers, nor privatization, nor the inflow of EU funds have so far succeeded in curing one of the greatest structural shortcomings of the Greek economy. Unfortunately, high public debt does not seem to be the only problem facing the national economy. Government and economic officials estimate that the 2004-2005 period will be a tough one for the fiscal economy. The completion of major projects and the need to repay the debt accumulated by costs for the Athens Olympic Games are expected to create many daunting problems. Should the global economy stay in good shape, the shocks could be buffered without much harm. Otherwise, the repercussions could be extremely painful. Some fear a resurgence of the Portugal scenario, where the much-hyped economic miracle crumbled overnight, throwing the Barroso administration into political despair. In light of the above, the government and the opposition must both face up to grave responsibilities. The former must do everything to keep a reign on the cost of the Games and, above all, avoid giving in to the typical and destructive temptation of pre-election handouts that benefit a small minority to the expense of the rest of the population. For its part, the opposition must avoid making lavish promises which cultivate great public expectations that wreak social turmoil after a rude awaking into reality.