Success and prudence

The Greek government program to stabilize the national economy is finally yielding fruit. The success was confirmed on Monday in Brussels by EU Economic and Monetary Affairs Commissioner Joaquin Almunia. The EU official said that Greece has returned to within eurozone fiscal levels as the deficit this year and next is expected to dip below the red-flag 3 percent level – that is without taking into account the recent revision of Greece’s GDP. Better still, the commissioner acknowledged that next year the eurozone goals will be achieved with permanent measures. That’s the good news. The government’s economy planners have managed to tame deficits, a success that should have a spillover effect on other aspects of the economy. But they should be wary of other dangers. The euphoria caused by these accomplishments could well engender political pressures for a return to deficit-ballooning fiscal policies. The conservative administration must keep its feet on the ground. Stabilizing the economy will help the people and the country in general. But unlike pressures for spending, feeling the effect will take time. A lot will depend on the political management of this economic achievement as next year will effectively be a pre-election year. New Democracy must avoid repeating the political cycle of the economy, i.e. three years of tight fiscal policy followed by a more relaxed fourth year. It must not give in to populist pressures and highly damaging handouts. The savings of Greek taxpayers who paved the way for fiscal stability must not be squandered.