BoG, government

There are growing indications that Bank of Greece (BoG) Governor Nicholas Garganas has come under direct and indirect pressure from government officials to adjust data and assessments in the bank’s October midterm report in line with figures supplied by Costas Simitis’s government and on which the budget is based. The government spokesman hastily denied a story published the day before yesterday that Garganas had written to the premier about his concerns, but he avoided referring to the substance of the issue, as to whether there is a discrepancy between the government’s and the bank’s assessments of Greece’s macroeconomic and fiscal performance, as has been common in recent years. In any case, the independence of BoG is firmly entrenched so that it can accurately reveal the economic position of the country and not distort it to suit the political purposes of the government of the day. Burying one’s head in the sand in connection with problems and embellishing everything for propaganda purposes are practically de rigueur in politics, but in economics only accurate depiction and full knowledge of the extent and depth of problems can be a starting point from which to solve them, if the political will exists. It is the Bank of Greece’s duty, therefore, to present the situation as it really is, confronting the government with the responsibility of choosing a policy that will make things better or worse. A few months before the elections, with clear signs of a growing deficit and the announcement of handouts that undoubtedly raise pressure on the public deficit, the political significance of embellishing the Bank of Greece’s economic data is glaringly apparent, as the bank must carry out its task in a tense political climate. It is exactly this kind of tense situation with many political consequences that test the prestige and trustworthiness of independent institutions. No public benefit stems from bestowing independence on technocrat employees if they prove themselves incapable of acting independently of the government’s political expedients at crucial times. Like it or not, the Bank of Greece must show that it is able to rise to the occasion in sensitive or even unfavorable conditions, despite the current propaganda efforts of the ruling party.

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