BoG Governor: Greece’s Crisis Could Have Been Avoided, If…

Posted by in Economy

“Greece’s path to current crisis wasn’t inevitable. The economic crisis could have been avoided, if the problems were addressed earlier.” Has the statement of Yiorgos Provopoulos, the Governor of Bank of Greece, shocked anyone in the debt-ridden country? I don’t think so. Some Greek commentators interpreted it in the context of the micro-cosmos of politics, i.e. that Provopoulos criticized ex PM George Papandreou for crisis mismanagement.

“The warnings were numerous and repetitive, but the responds were only negative reactions ranging from skepticism to open hostility and acid denouncing tone; many times these reactions were dogmatic and outdated,” Provopoulos said further while speaking at an event hosted by Greek economic research foundation IOBE on Thursday.

Refering to the present and the future, the central bank governor warned that Greece must implement structural reforms to secure its membership in the euro zone or risk dire consequences.

“If we ignore reality this time, the outcome will be a given: the country will become economically and politically isolated,” Provopoulos stressed and underlined the necessity of reforms that are required if Greece wants to stay in the euro zone. “Changes that will require broad social and political consensus,” he added. (sources: Reuters and News247.gr -incl Provopoulos’ speech in Greek)

Greek Reforms in Turtle Space

The Greek turtle-speed pace on the path of structural reforms has been often criticized not only the Greeks themselves. International media have often put their finger in the open Greece’s wounds. In interesting article “Slow Progress: Greece Struggles To Make Necessary Reforms” you can read in the English edition of German weekly DER SPIEGEL.

Greece’ English-newspaper ATHENS NEWS reported recently quoting an IMF official complaining about “unprecedented delays”  in the proper implementation of fiscal and structural reforms linked to the first 110bn euro bailout programme. Instead, “horizontal austerity measures are constantly being adopted that are leading nowhere, whilst further wage and pension cuts are unjustified because the only way to improve competitiveness is through growth-creating market liberalisation, the opening of closed professions and productive investments.” (IMF Clashes with EU Over Greek austerity).

However, horizontal erasing of wages and pensions and horizontal tax increases seem to be the easy and lazy solution…