Governor of the Bank of Greece (BoG), Giannis Stournaras, estimated that it will take another 40 years for Greece to ensure its prosperity and return to public debt of 60% of GDP.
Speaking in the anniversary issue of the Parliament’s magazine Stournaras set as a condition for the above goal that certain basic reforms will proceed decisively and that we will achieve primary surpluses of 2% of GDP on an annual basis.
“At the Bank of Greece we have made calculations, according to which with a primary surplus of 2% of GDP and with reforms of the type I mentioned above, we can ensure on the one hand the desired primary surplus and on the other hand an appropriate difference between the interest rate of the government of debt and the rate of economic growth (this difference is called in technical dialect the “avalanche effect”), so that we reach the debt to 60% of GDP in about 40 years. It is something possible and we have to bequeath it to our children and grandchildren,” the head of the Central Bank said.
“While the Post-colonialism saw the establishment of an exemplary Democracy, from an economic point of view, and especially from a fiscal point of view, we did not do well, that is why we reached a quasi-bankruptcy in 2010”, he added to then emphasize: “Most people think that our problem in the previous period it was mainly the public sector deficit. It wasn’t the most important thing. It was inflation because we had an economy that started with interest rates at 19% only to come down to about 4%. This big rate cut superheated the economy and drove up all values.”
Education, Health and Environment: Three immediate reforms
With regards to necessary reforms, which the state must proceed with immediately, . Stournaras summarized them in three key areas: Education, Health and Environment.
“All reform efforts in all sectors are important”, but “if I had to choose three, I would choose Education first, Health second and Environment third. In my opinion, the main problem in Greece is Education. The PISA (student assessment) results are not encouraging for our country. Also, in the OECD’s skills index, we have the worst position after Turkey. Despite the fact that we have many graduates and postgraduates, the OECD classifies 18.5% of them as citizens with very limited skills. Only Turkey is worse than Greece in this indicator. Therefore, the biggest reform for me must be done in Education, and in fact at all its levels, because that’s where everything starts”, he said.
A major problem is the lack of labor force: “We lack 200,000 workers”
Stournaras warned that the country will soon face a major problem if we do not deal with it quickly: the lack of labor force, as “at the moment we lack 200,000 hands in the activities around tourism, the agricultural sector and construction . If we don’t find them immediately, we will start to have a problem in the economy as well”, he says and reminds meaningfully that “in the 90s, in the process of convergence towards the EMU, foreign workers were the ones who kept inflation in Greece low. If we didn’t have immigrants in the agricultural sector and in construction, we wouldn’t have met the inflation criterion.”
The free market needs a social safety net
Stournaras emphasized the need to ensure prosperity and social cohesion in the context of the free market.
“Our ultimate goal is for people to be happier. And how will they be happier? By being free from the fear of unemployment, poverty, disease, the future of their children, lack of access to progress and public goods. Fear and economic inequalities also feed populism, which threatens democracy. Fear is also created by ignorance, by economic illiteracy, by the lack of basic knowledge and by the weaknesses of the educational system. The creation of inequalities is due to the nature of the free economy system. One of the main problems of the Western World is how to reconcile capitalism with democracy. Capitalism means free market. However, the free market also needs a social safety net to avoid creating inequalities. And this net is supported by a targeted social policy, effective public Education and Health, a fair and efficient tax system, effective supervision of the markets”.
PS By 2064, I won’t be around mentally or physically to check Greece’s prosperity and neither will be 68-year-old Stournaras. So who cares about the far future if the current present is so miserable in so many ways and nothing is being done to improve it but on the contrary the policies of neo-liberal New Democracy have taken the totally wrong way.
, Giannis Stournaras, estimated that it will take another 40 years for Greece to ensure its prosperity){kind=link}
That is because Greece will be a debt slave to service the “bailouts” until 2060. Btw, these were bailouts of foreign and national banks that made bad investments in Greece while everybody knew that they were bad investments but they also knew they would be bailed out. Does anybody else get a bailout when they made a bad investment. Didn’t think so.
If Greece had defaulted on its debts, it would be debt free. Things would have been bad, quite bad, but what is the difference with the situation now? Defaulting on your debt is bad but eventually, creditors will return, more so when you debt free. You just need to regain their trust.
Now Greece is a debt slave, people are miserable and you signed over your sovereignty to Brussels and Frankfurt while the banks are laughing all the way to their banks.
Stournaras is a very low-quality economist. I find it difficult to believe that he ever studied economics in a decent university, judging from the utter garbage that he proffers. He speaks and writes like a third rate politician, carrying out instructions for those in power. It is something shameful for Greece to have people like this in prominent, overpaid positions.