The right path

After a year of painstaking efforts and effective measures, the conservative leader and his national economy minister can finally sleep easy. The Greek economy has already overcome the worst: The unnerving fiscal deficits, anxiety over EU deadlines, concerns about impending recession and an unemployment boom have been attributed to the Socialists’ devastating legacy. Sure, the New Democracy administration has not created wonders. Nor has it cured all of the economy’s ills. However, the government can boast that it has brought the economy under control so that future prospects look much rosier. The fiscal deficit is expected to drop between 3.6 and 3.8 percent of GDP this year and under the 3 percent threshold in 2006, ending EU deficit supervision of the Greek economy. True, the growth rate has not matched pre-election pledges of 5 percent but it continues to hover at 3.6 percent – three times the eurozone average – while unemployment rates are falling. Relieved as Costas Karamanlis may be, he cannot afford to relax. The downfall was halted, bankruptcy was averted but the threats remain. Public debt has soared to 218 billion euros and should interest rates go up next year or in 2007, the economy will suffer. Foreign investors remain extremely reluctant while incompetent state officials are responsible for losing a large share of EU funds. The scourge of tax evasion undermines fiscal stability, the state apparatus remains mired in corruption and incompetence. The restoration of a business- and investment-friendly economic environment has proved a pipe dream. The prime minister must show a high level of determination and dedication and follow the only path open to him: the completion of reforms to create an open and competitive economy.