Budget Office: The draft for the post-Memorandum era is incomplete

Budget Office: The draft for the post-Memorandum era is incomplete


By Spiros Sideris – Athens

“Fiscal consolidation and reforms are carried out in a constantly changing international and European environment, like being ‘on quicksand'”, is stated in the introductory note of the quarterly report for the period July – September 2014, which was released on Wednesday by the State Budget Office, of the Parliament.

As characteristically noted in the same report, “symptomatic of the fluid situation is also the fact that there has not yet been developed a national program for the era after the current Memorandum (that ends in 2014)”.

According to the same report, “the major concern today is the development that focuses on innovation and productivity and, in that regard to the restructuring of production and not the creation of jobs in shops, catering etc”.

In this context, the report notes: “any development plan requires a clear distribution plan and therefore, any redistributive measures must serve that purpose”.

Redistribution for development requires a deep fiscal reform, as has been recognised by the major political forces. In addition, social policy on shaky economic foundations is not possible”.

As noted, ” different perceptions are projected to the issue of development, but are not explained nor adequately documented. Thus, on the one hand, the emphasis on the role of private investment tends to overlook the importance of stable rules of the game, quality ‘governance’ and well selected public investment in infrastructure, and on the other hand the belief that the state is the solution ignores historical experiences here and elsewhere.

“In our opinion any government, seeking the right balance between state and market should take into account: (a) the international and European experiences, (b) the undisputed core of the evolving consensus in Europe and (c) the specific features of an economy such as the Greek, which is trapped in vicious circles.

In other words: the end of the Memorandum and the return to the markets for lending does not mean that the greek economy is not vitiated by serious structural problems or that there isn’t a just as serious social problem. All these need to be addressed by applying a convincing development program, which however does not exist or has not been announced”.

As highlighted in the same report, “in such a context of national initiatives for the transition from stabilisation to sustainable development, we estimate that the cooperation with European institutions is extremely necessary. A new program aimed at restoring the productive base should have primarily been our own concern. However, the drafting of a reliable development program should be based on cheap resources from the ESM, the ECB and other European institutions”.