Trimming the public debt

When more money goes to pay off the debt than into investments, you really can’t get an economy going. This point was made yesterday by the EU’s Economic and Monetary Affairs Commissioner Joaquin Almunia on the day Greece welcomed the end of community supervision of its economy. Official data show Greece will pay -9.750 million in debt interest, while public investment will be down to -8.750 million. Excluding EU funds, state investments stand at less than -5 billion, i.e. less than half the debt. In the light of these figures, it becomes clear that Almunia’s point was a tough warning to the government and the political parties at large. Greece must get its public finances into shape and trim public spending in order to reduce its debt. Government officials must refrain from the promises of handouts and the opposition shed populist slogans. After all, during Socialist rule public debt skyrocketed from 30 percent of GDP to 110 percent.