Το επονομαζόμενο Ευρωπαϊκό Συμβούλιο Εμπειρογνωμόνων ΕΕAG (μία ομάδα οικονομολόγων περί τον πρόεδρο του Οικονομικού Ινστιτούτου του Μονάχου Ifo Χανς-Βέρνερ Ζιν) προειδοποιεί για επαπειλούμενη πτώχευση της Ελλάδας.
Το αργότερο το 2013, η υπερχρεωμένη χώρα θα χρειαστεί πρόσθετη βοήθεια εκτιμά το EEAG σύμφωνα με δημοσίευμα της εφημερίδας Suddeutsche Zeitung. Η πολιτική λιτότητας που ακολουθεί η Ελλάδα δεν επαρκεί και οι ερευνητές συνεχίζουν να υποτιμούν την κρίση στην οποία βρίσκεται η χώρα, υποστηρίζει το Συμβούλιο. Εκτιμά ότι η χώρα μετά την εκπνοή του πακέτου διάσωσης δεν θα είναι σε θέση να αναχρηματοδοτήσει το χρέος της μέσω των αγορών. Προτείνει δε, ως εναλλακτική λύση την έξοδο της χώρας από την Ευρωζώνη.
Το δημοσίευμα της εφημερίδας αναφέρει επίσης εκτιμήσεις του προέδρου της Ευρωπαϊκής Τράπεζας ανασυγκρότησης και ανάπτυξης Τόμας Μίροου ότι η αναδιάρθρωση του χρέους της Ελλάδας είναι αναπότρεπτη. «Είναι αμφίβολο ότι η Ελλάδα με ένα ποσοστό χρέους επί του ΑΕΠ άνω του 150% θα μπορέσει σε βάθος χρόνου να εξυπηρετήσει το χρέος της», δήλωσε ο κ. Μίροου στην Ζιντόιτσε Τσάιτουνγκ. Πρόσθεσε δε ότι «για να μπορέσει η χώρα να ξεπεράσει τα προβλήματά της, πρέπει το ποσοστό του χρέους να πέσει στο 100% του ΑΕΠ.
www.kathimerini.gr με πληροφορίες από ΑΠΕ-ΜΠΕ
http://www.kathimerini.gr/4dcgi/_w_articles_kathremote_1_22/02/2011_379776
____________________________________
Αυτά λέει η είδηση, ας διαβάσουμε όμως λίγο τι λέει η έκθεση για την Ελλάδα.
Δική μου η επιλογή των αποσπασμάτων.
____________________________________
Chapter 3: Greece
This chapter discusses whether the bailout package will prove sufficient to place the Greek economy on a sustainable path, i.e. whether after the end of the programme in June 2013 Greece will be able (or the market will perceive it as able and willing) to continue making the large interest payments and roll over its debt without the need for further official assistance.
3.2 Macroeconomic developments
3.2.1 Growth performance the relatively fast growth of the last decade did not have solid foundations, but was based on an unsustainable public and private spending spree.
3.2.2 Labour market
The fluctuations in the unemployment rate were not matched by fluctuations in the total employment rate
which, following a small decline in the early 1990s, increased steadily, from 55 percent in 1983 to 61 percent
in 2008. Unlike other euro-area (EA) countries, the increases in the employment rate in Greece were
not accompanied by substantial decreases in hours worked per employed person (Figure 3.3). The average
annual hours worked per employed person remain far above the EA-12 average (Greece: 2,160, EA-12:
1,578, in 2009) and are higher than in any other country in the EU-27.
Greece had (until the reforms of July 2010) one of the strictest EPL measures among OECD countries (OECD 2004).
An explanation for the high number of hours worked is the importance of self-employment in the Greek
economy. The share of self-employment in total employment is the highest among OECD countries (it
is about 16 percentage points higher than the EA-12 average).4 Self-employed people tend to work and
report longer hours than dependent employees; for example, it is common for small store owners – and
there are many of them in Greece – to work more than 70 hours per week.
3.2.3 Public sector
The Greek government is highly centralized. The central government collected almost 67 percent of
revenues and accounted for about 55 percent of expenditures in 2007; the relevant figures for the
OECD as a whole are 58 percent and 43 percent, respectively (OECD 2009).
3.2.3.1 Government spending and its components
The growth in government spending in Greece is largely accounted for by the growth in social transfers,
which rose from 8 percent of GDP in 1970 to 21 percent of GDP in 2009, and in the compensation of
public employees (from 8 percent in 1976 to 12.7 percent of GDP in 2009).
The most important category among income transfers in Greece is pension benefits. This is the fastest growing
category of social spending, and the biggest risk regarding the sustainability of public finances
The above-described developments in public sector pay and employment reflect the fact that public sector
employment has remained a major channel through which political parties in Greece dispense favours to
partisan voters, as well a “redistributive” tool in periods of high unemployment (see Demekas and Kontolemis 2000).
3.2.3.2 Sources of government funding
The outline of the Greek tax system shows that Greece has significantly lower tax revenue (including
social security contributions) than the other EU-15 countries and even lower ones than the other countries
in the periphery (with the exception of Ireland). In comparison to the EU-15, the lack of total government
revenue, and of tax revenue, relative to GDP has been in the range of 6 to 7 percent of GDP in recent years.
Both the issues of equity and efficiency are adversely affected by the main issue bedevilling Greek public
finances, namely tax evasion. This issue is particularly pertinent among those owning small businesses and
the self-employed (from plumbers and electricians to medical doctors and lawyers), and it is exacerbated by
the fact that the share of self-employed in total employment is so high in Greece. That the selfemployed
are more likely to tax-evade than those on dependent employment is well established in the literature.
In addition to the large rates of income tax evasion, Greece faces very high rates of payroll tax evasion.
As is to be expected in such cases, the estimates vary widely.
Studies conducted by the Social Insurance Foundation (IKA) estimate that payroll tax evasion has increased through the years; the early 1990s’ estimates were around 13 percent of revenues, whereas more recent estimates raise this figure from about 16 percent in 2003 to 20 percent in 2005 (POPOKP 2005).
The failures in collecting taxes and in reigning in government spending were reflected in the fast accumulation
of public debt. The accumulation of public debt through successive budget deficits is depicted in Figure 3.8 for the period from 1974 to 2009.14
Given the fast growth in nominal (and real) GDP that the Greek economy registered from the mid-1990s until 2008 and the rather moderate (by Greek standards) deficits recorded during the period, how can one account for the fact that there was not a decline in the debt-to-GDP ratio?
To answer this question we decompose the wellknown identity15 describing the accumulation of public
debt in order to disentangle the relative importance of the following four factors to debt accumulation:
(i) over-generous programme spending and lax tax policy (and administration) leading to a primary
deficit even if the economy is operating at potential output – we call this the structural component;
(ii) primary deficits arising as a result of output being below potential – the cyclical component;
(iii) the (real) interest rate exceeding the GDP growth rate, so that the debt-to-GDP ratio would rise even if programmespending and revenues are equal – the rate component;
(iv) various activities undertaken by the government that affect the accumulation of debt but are not
reported as deficit – the stock-flow adjustment.
Figure 3.10 makes clear that the rise in the debt-to-GDP ratio by 41 percentage points from 1990 to 2009 can be wholly attributed to the stock-flow effect, which, in the absence of other forces, would have contributed 62 percentage points to the debt-to-GDP ratio. (We note that this conclusion would most likely remain intact had we used the latest debt and deficit data as revised by Eurostat in November 2010.)
From 1990 to 1993 the government took over the long-standing liabilities of these entities to the banking system – up to that point these liabilities were not recorded in government debt.17 These liabilities (known as “consolidation loans”) amounted to 1.8 trillion drachmas (about 5.3 billion euros), and had by 1992 added
10 percentage points to the debt-to-GDP ratio.
Large stock-flow adjustments were also recorded during the 1994 to 2000 period since the second phase of
EMU required a consolidation of government accounts, especially with the central bank. The government
had three accounts with the central bank, which were overdrawn to the sum of 3.04 trillion drachmas (about 9 billion euros), all of which had to be transformed into formal debt by the end of 1993 so that Greece could enter the second phase of EMU (see Manessiotis and Reischauer 2001 for more details). This action alone added another 16 percentage points to the debt-to-GDP ratio. In addition to these very large, debt-increasing, stock-flow adjustments, it is worth mentioning that during the consolidation period some (far smaller) debt-reducing adjustments were made. These involved the transfer of Social Security Fund’s deposits from the central bank (where they were held in its own name) to the government’s accounts, as well as the privatization revenue that was used to retire public debt. It is evident that the effort at budget
consolidation that started in 2010 will not be successful if it does not manage to reign in the creation
of the off-budget liabilities, which are still accumulating in some publicly-owned enterprises.
3.2.4 External imbalances
Bringing the government’s finances in a sustainable position is a key priority for Greece. Unfortunately,
this may not be the main problem; the very high, and rising, net foreign indebtedness may be the bigger problem.
This huge drop in the national saving rate has (since 1988) not been associated with a rise in government
borrowing, but it is wholly attributable to the decline in the private sector’s gross saving rate (from 27 percent in 1988 to 11 percent in 2008; see Moutos and Tsitsikas 2010).
The upshot of the large decline in national saving for Greece has been a gradual widening of the current account deficit and the accumulation of foreign debt (Figure 3.13).
During the recent global crisis, the share of services in total exports decreased in Greece by about 4 percentage points from 2008 to 2009, whereas it increased by about 2.5 percentage points in the EA-12. These differential movements reflect the fact that Greece was earning from transportation services in 2008 as much as from its total exports of goods (including ships and oil). The considerable slowdown in world trade in 2009 reduced Greek receipts of transportation services by about 30 percent in 2009 relative to 2008.
3.3 The crisis
The slowdown in global economic activity in 2008, and the recession in OECD countries in 2009 were the
prelude, but not the cause, of the Greek crisis.
3.4 The bailout
In October 2009, the newly elected Greek government announced that the projected budget deficit for 2009
was 12.7 percent of GDP rather than the 2 percent displayed in the Greek 2009 budget (approved by Parliament in December 2008). From this moment until the formal request for assistance on 23 April 2010, the Greek government attempted to “educate” the public about the severity of the brewing crisis and persuade itself that nothing less than the standard IMF bailout package was the only available option. As becomes apparent from the events detailed in Box 3.2, domestic political and economic considerations, including the need to persuade the traditional voters of the governing party as to the necessity of the conditionality-based bailout package, were instrumental in delaying the official recognition of the limited
choices available to the country.
....Note that none of these consolidation measures force the Greek government to save and actually reduce its debt. The measures are merely designed so as to reduce the net increase in debt.
3.5 Will the bailout package prove enough?
3.5.1 Economic considerations
external accounts data from the first nine months of 2010 suggest that the predicted improvements may not be forthcoming. Consider the (provisional) data for the first nine months of 2010 provided by the Bank of Greece.29 The level of the current account balance for January to September 2010 shows a very small improvement over the relevant 2009 magnitude; according to these data the drop of the current account deficit relative to GDP is less than 0.3 percentage points. Similarly, net exports of goods and services show an improvement of less than 1 percentage point (over the 2009 figure). The sum of the current account balance and the capital transfers balance (i.e. net borrowing in the Ameco nomenclature) shows deterioration!
The above arguments illuminate the very narrow path on which the Greek economy must tread during its
adjustment towards fiscal and external sustainability. On the one hand, in order to reduce the budget deficit,
slow down the rise in the public debt-to-GDP ratio and quickly place it on a downward trend, it needs the
reduction in GDP in 2010 and 2011 to be as small as possible, and rise fast thereafter. On the other hand,
given the absence of the exchange rate as an instrument to regain the loss in competitiveness and the
slow pace of internal devaluation, any improvements in the current account will have to rely on a sharp internal devaluation with declining prices, wages and a drop in GDP so as to compress imports. Alternatively, all hope for an improvement in the current account will have to rest on fast increases in world income and trade so as to export its way out of the crisis; the current world economic environment is not a good portent in this respect. Our back-of-the-envelope calculation (see Section 3.6.1) suggests that the “required” drop in GDP is probably much larger than what is predicted in the Memorandum.
3.5.2 Political considerations
From the moment the newly elected government appeared to understand the gravity of the situation, a
serious effort was made to reverse the widespread belief that an IMF-style programme would be politically
infeasible. The government seems, up to this point, to have managed to persuade a large proportion of the population of the inevitability of the austerity measures coming in exchange for the bailout programme. This effort was aided in no small measure by using the media to expose gross cases of tax evasion and public sector corruption (which it promised to prosecute), as well as cases of under-worked and over-paid public sector employees. Some evidence of the acceptance (albeit grudgingly) of the policies implied by the bailout package is provided by the latest Eurobarometer, which reports results of interviews conducted between 7 and 25 May in Greece, when most of the details of the bailout package had already been reported in the press (Eurobarometer 2010). In response to the statement: “In a international financial and economic crisis, is it necessary to increase public deficits to create jobs”, more people in Greece than in any other European country have stated that they disagree (for Greece, 37 percent “agree” and 53 percent “disagree”; for the EU-27, 46 percent “agree” and 36 percent “disagree”).
A crucial determinant of the political feasibility of the bailout package is the response of the trade union movement.
The political dynamics so far seem to indicate that the current government has been able to build sufficient
support for the reforms in the bailout package. Yet considerable dangers remain, as the full extent of theeconomic problems Greece faces has not been revealed to the public. It would not be surprising if the elites switched in favour of default in case they thought that their power to shape policy in Greece could be compromised by policy proposals of the outside actors that go beyond the usual austerity measures or if the economic situation turned much worse than the IMF predicts, as we fear . The elites may also find other allies in this case (in addition to the rising numbers of the unemployed): the small business owners (many of them shopkeepers with either no or just one or two employees) who suffer disproportionately from the drop in consumption spending and have small room for adjustment. The fact that both the leftwing parties and the main right-wing party are opposed to the bailout package suggests that the danger that an “unnatural” coalition may be formed in the medium-term should not be ignored.
3.6 The day after (June 2013)
The question is: What will happen if, as we expect, Greece’s problems will not be resolved by 2013, in particular if the huge current account deficit is still unsustainable? Apart from a debt moratorium, which we discuss below, there are in principle only three options.
i) Greece returns to the drachma and depreciates (external depreciation)
ii) Greece goes through an equally radical internal depreciation process during which wages and prices fall by the same amount relative to the rest of the euro area as they would have done with an external depreciation.
iii) The European Union finances the Greek current account deficit with ongoing transfer programmes.
The first two of these options are mutually exclusive, but blends of the third and either the first or the second options are possible. We will now discuss these three options in more detail.
3.6.1 External and internal depreciation: the similarities
From a political perspective a policy of exiting from the euro, returning to the drachma and allowing adepreciation to take place looks very different from an austerity programme that tightens Greek budget constraints, as less capital is flowing into the country. However, from an economic perspective the differences are smaller than may appear at first glance .
Thus the reduction in Greek GDP necessary to get rid of the entire current account deficit would be 33 percent.
3.6.2 The differences between external and internal depreciation
However, an external depreciation also has extremely problematic implications, the most obvious one being a bank run.
It is only clear that companies of the real economy will fare better after an external depreciation.
3.6.3 Transfer union
Politicians should
not overlook, however, that there is the risk of Greece becoming addicted to the transfers, since it seems to have become addicted to the capital flows of the past.
...For these reasons, the EEAG is sceptical about replacing the capital flows with transfers that involve more
international redistribution in the European Union or the euro area. Instead it argues for helping out Greece under the general rules specified in Chapter 2 .
3.6.4 Necessary tax reforms in Greece
Reforms of the tax system are the most urgent of all.
3.6.5 Greece does not graduate in time – another bailout package in 2013?
It is important in this context to note that no majority decisions of the European Union will be sufficient
for a continuation of the bailout programme. After all, the agreement of the EU countries on 16–17 December
2010 (see Chapter 2 for details) explicitly rules out the use of Community instruments with majoritybased decision-making for this purpose, and the intergovernmental help as specified in the decisions of May 2010 were illegal, as French Finance Minister Christine Lagarde has declared, implicitly confirming a rumour that the German Constitutional Court required a treaty change because the decisions were illegal.35 All will depend on how the envisaged reform of the Community treaty will be designed.
In Chapter 2 we have given our proposals for specifying the decisions of 16–17 December. In principle we foresee a three-step procedure, with liquidity help in the first stage, a breakwater procedure that avoids full insolvency in the second stage and full insolvency. There is a good chance that Greece will be able to find new funds in the capital market if it is able to offer the new CAC bonds, which offer the privilege of being convertible, after a haircut, into partially secured replacement bonds should Greece not be able to service them. As this limits the possible loss to investors, it will be possible to sell these bonds in the market if they are endowed with an appropriate and limited interest rate spread over safer assets.
If not, it will have to reach an agreement with its creditors about restructuring its debt, perhaps using partially
secured replacement bonds under the rules we have outlined. The ESM agreed on 16–17 December 2010 could help, as we have pointed out, but only after private creditors have agreed to a haircut. Politically, the question of whether or not Greece will or should exit from the euro area will depend on which of these choices are made, but from an economic perspective it is a separate issue, as we have argued above. Greece should make this decision based on its judgement of whether or not an internal or external depreciation will bring about less hardship.
_______________________________________________
H ANAΛΥΣΗ ΕΙΝΑΙ ΠΟΛΥ ΚΑΛΗ και νομίζω πολύ κοντά στη πραγματικότητα.
Διαφέρει από τις ερμηνείες και το "φτιασίδι" που βάζουν τα ΜΜΕ αλλά και από τα συνοπτικά συμπεράσματα.
Με δύο λόγια: το βασικό πρόβλημα είναι η ανταγωνιστικότητα, η οποία περνάει κυρίως από το αποτέλεσμα εισαγωγών-εξαγωγών αλλά και ροής κεφαλαίων.
Οι τρόποι άμβλυνσης του προβλήματος είναι δύο:
Α-Υποτίμηση [εσωτερική (που ακολουθείται) - εξωτερική] - οι ελίτ αυτή τη στιγμή είναι με την "εσωτερική" καθώς θα χάσουν τα περισσότερα εκτός, οι μικρές εταιρείες είναι αυτές που θα κερδίσουν εάν υπάρξει έξοδος από το ευρώ
Β-Μεταβίβαση πόρων από το Βορρά (ΚΠΣ ή κάτι άλλο)
Το Α δεν αποκλείει το Β. Το Β το αποκλείουν οι Γερμανοί.
Οι πιθανότητες να αμβλυνθεί αλλιώς είναι μικρές.
Η πολιτική και οικονομική στρατηγική της κυβέρνησης (και των ελίτ) είναι, αυτή τη στιγμή:
Δάνειο €110δισ/επιμήκυνση-μικρότερο επιτόκιο. - μόνιμος μηχανισμός στήριξης (καθώς εν διορθώνεται το πρόβλημα σε μια μέρα με υποτιμήσεις) - όχι "κούρεμα"/αναδιάρθρωση - παραμονή στο ευρώ
υ.γ. κριτική:
το report, σε σχέση με το χρέος και τα ελλείμματα, αποσιωπά ορισμένες κρίσιμες πτυχές, όπως οι μεταφορές κεφαλαίων από τα εξοπλιστικά [περί τα €90δισ. υπολογίζονται οι στρατιωτικές δαπάνες 1996-2009-http://milexdata.sipri.org] ή μικρότερα μεγέθη που σχετίζονται με τις προμήθειες του δημοσίου και των φορεών του και έχουν δοθεί μίζες για να παρθούν οι δουλειές, ενώ αφιερώνει μικρό μέρος στην επίπτωση της διοργάνωσης των ΟΑ 2004 [επίσημα €12δισ. ανεπίσημα €20δισ. ή και €30δισ.(Εκτιμήσεις ανεβάζουν το τελικό κόστος μεταξύ των 20-30 δισ. ευρώ αν συμπεριληφθούν δαπάνες που δεν θα γίνονταν ποτέ ή θα περνούσαν από λιγότερο ταχύρρυθμες διαδικασίες αν δεν υπήρχε η χρονική πίεση και ο μεγαλοϊδεατισμός της Ολυμπιάδας - http://www.enet.gr/?i=news.el.article&id=140838), (On November 13, 2004, the Greek embassy estimated the costs of hosting the Olympics at €8.954 billion (about $11.2 billion in 2004) not including construction made regardless of the Games, but including 1.08 billion Euros ($1.35 billion) in security costs.-http://en.wikipedia.org/wiki/2004_Summer_Olympics)] αλλά και άλλων διοργανώσεων-πρόβες. ΟΛΑ ΤΑ ΠΑΡΑΠΑΝΩ ΑΠΟ ΠΟΥ ΤΑ ΠΡΟΜΗΘΕΥΤΗΚΕ Η ΕΛΛΑΔΑ;
Μικρό μέρος αφιερώνει και στις μη-επανεπενδύσεις των κερδών όσων πλούτισαν στο κορμί της χώρας και έβγαλαν τα λεφτά έξω, όπως γίνεται με το σε slow motion bank run του 2010 ή τα ..€600δισ. στην Ελβετία...
Τσιμουδιά επίσης και για τους φόρους που πληρώνουν οι ..εφοπλιστές.
Το αργότερο το 2013, η υπερχρεωμένη χώρα θα χρειαστεί πρόσθετη βοήθεια εκτιμά το EEAG σύμφωνα με δημοσίευμα της εφημερίδας Suddeutsche Zeitung. Η πολιτική λιτότητας που ακολουθεί η Ελλάδα δεν επαρκεί και οι ερευνητές συνεχίζουν να υποτιμούν την κρίση στην οποία βρίσκεται η χώρα, υποστηρίζει το Συμβούλιο. Εκτιμά ότι η χώρα μετά την εκπνοή του πακέτου διάσωσης δεν θα είναι σε θέση να αναχρηματοδοτήσει το χρέος της μέσω των αγορών. Προτείνει δε, ως εναλλακτική λύση την έξοδο της χώρας από την Ευρωζώνη.
Το δημοσίευμα της εφημερίδας αναφέρει επίσης εκτιμήσεις του προέδρου της Ευρωπαϊκής Τράπεζας ανασυγκρότησης και ανάπτυξης Τόμας Μίροου ότι η αναδιάρθρωση του χρέους της Ελλάδας είναι αναπότρεπτη. «Είναι αμφίβολο ότι η Ελλάδα με ένα ποσοστό χρέους επί του ΑΕΠ άνω του 150% θα μπορέσει σε βάθος χρόνου να εξυπηρετήσει το χρέος της», δήλωσε ο κ. Μίροου στην Ζιντόιτσε Τσάιτουνγκ. Πρόσθεσε δε ότι «για να μπορέσει η χώρα να ξεπεράσει τα προβλήματά της, πρέπει το ποσοστό του χρέους να πέσει στο 100% του ΑΕΠ.
www.kathimerini.gr με πληροφορίες από ΑΠΕ-ΜΠΕ
http://www.kathimerini.gr/4dcgi/_w_articles_kathremote_1_22/02/2011_379776
____________________________________
Αυτά λέει η είδηση, ας διαβάσουμε όμως λίγο τι λέει η έκθεση για την Ελλάδα.
Δική μου η επιλογή των αποσπασμάτων.
____________________________________
Chapter 3: Greece
This chapter discusses whether the bailout package will prove sufficient to place the Greek economy on a sustainable path, i.e. whether after the end of the programme in June 2013 Greece will be able (or the market will perceive it as able and willing) to continue making the large interest payments and roll over its debt without the need for further official assistance.
3.2 Macroeconomic developments
3.2.1 Growth performance the relatively fast growth of the last decade did not have solid foundations, but was based on an unsustainable public and private spending spree.
3.2.2 Labour market
The fluctuations in the unemployment rate were not matched by fluctuations in the total employment rate
which, following a small decline in the early 1990s, increased steadily, from 55 percent in 1983 to 61 percent
in 2008. Unlike other euro-area (EA) countries, the increases in the employment rate in Greece were
not accompanied by substantial decreases in hours worked per employed person (Figure 3.3). The average
annual hours worked per employed person remain far above the EA-12 average (Greece: 2,160, EA-12:
1,578, in 2009) and are higher than in any other country in the EU-27.
Greece had (until the reforms of July 2010) one of the strictest EPL measures among OECD countries (OECD 2004).
An explanation for the high number of hours worked is the importance of self-employment in the Greek
economy. The share of self-employment in total employment is the highest among OECD countries (it
is about 16 percentage points higher than the EA-12 average).4 Self-employed people tend to work and
report longer hours than dependent employees; for example, it is common for small store owners – and
there are many of them in Greece – to work more than 70 hours per week.
3.2.3 Public sector
The Greek government is highly centralized. The central government collected almost 67 percent of
revenues and accounted for about 55 percent of expenditures in 2007; the relevant figures for the
OECD as a whole are 58 percent and 43 percent, respectively (OECD 2009).
3.2.3.1 Government spending and its components
The growth in government spending in Greece is largely accounted for by the growth in social transfers,
which rose from 8 percent of GDP in 1970 to 21 percent of GDP in 2009, and in the compensation of
public employees (from 8 percent in 1976 to 12.7 percent of GDP in 2009).
The most important category among income transfers in Greece is pension benefits. This is the fastest growing
category of social spending, and the biggest risk regarding the sustainability of public finances
The above-described developments in public sector pay and employment reflect the fact that public sector
employment has remained a major channel through which political parties in Greece dispense favours to
partisan voters, as well a “redistributive” tool in periods of high unemployment (see Demekas and Kontolemis 2000).
3.2.3.2 Sources of government funding
The outline of the Greek tax system shows that Greece has significantly lower tax revenue (including
social security contributions) than the other EU-15 countries and even lower ones than the other countries
in the periphery (with the exception of Ireland). In comparison to the EU-15, the lack of total government
revenue, and of tax revenue, relative to GDP has been in the range of 6 to 7 percent of GDP in recent years.
Both the issues of equity and efficiency are adversely affected by the main issue bedevilling Greek public
finances, namely tax evasion. This issue is particularly pertinent among those owning small businesses and
the self-employed (from plumbers and electricians to medical doctors and lawyers), and it is exacerbated by
the fact that the share of self-employed in total employment is so high in Greece. That the selfemployed
are more likely to tax-evade than those on dependent employment is well established in the literature.
In addition to the large rates of income tax evasion, Greece faces very high rates of payroll tax evasion.
As is to be expected in such cases, the estimates vary widely.
Studies conducted by the Social Insurance Foundation (IKA) estimate that payroll tax evasion has increased through the years; the early 1990s’ estimates were around 13 percent of revenues, whereas more recent estimates raise this figure from about 16 percent in 2003 to 20 percent in 2005 (POPOKP 2005).
The failures in collecting taxes and in reigning in government spending were reflected in the fast accumulation
of public debt. The accumulation of public debt through successive budget deficits is depicted in Figure 3.8 for the period from 1974 to 2009.14
Given the fast growth in nominal (and real) GDP that the Greek economy registered from the mid-1990s until 2008 and the rather moderate (by Greek standards) deficits recorded during the period, how can one account for the fact that there was not a decline in the debt-to-GDP ratio?
To answer this question we decompose the wellknown identity15 describing the accumulation of public
debt in order to disentangle the relative importance of the following four factors to debt accumulation:
(i) over-generous programme spending and lax tax policy (and administration) leading to a primary
deficit even if the economy is operating at potential output – we call this the structural component;
(ii) primary deficits arising as a result of output being below potential – the cyclical component;
(iii) the (real) interest rate exceeding the GDP growth rate, so that the debt-to-GDP ratio would rise even if programmespending and revenues are equal – the rate component;
(iv) various activities undertaken by the government that affect the accumulation of debt but are not
reported as deficit – the stock-flow adjustment.
Figure 3.10 makes clear that the rise in the debt-to-GDP ratio by 41 percentage points from 1990 to 2009 can be wholly attributed to the stock-flow effect, which, in the absence of other forces, would have contributed 62 percentage points to the debt-to-GDP ratio. (We note that this conclusion would most likely remain intact had we used the latest debt and deficit data as revised by Eurostat in November 2010.)
What government actions (both before and after 1991) were responsible for this huge contribution of stock-flow adjustments to the rise in the debt-to-GDP ratio?
The Greek government had accumulated (especially during the 1980s) large implicit liabilities in the form of loan guarantees to “restructured enterprises”, which became quasi-public entities.From 1990 to 1993 the government took over the long-standing liabilities of these entities to the banking system – up to that point these liabilities were not recorded in government debt.17 These liabilities (known as “consolidation loans”) amounted to 1.8 trillion drachmas (about 5.3 billion euros), and had by 1992 added
10 percentage points to the debt-to-GDP ratio.
Large stock-flow adjustments were also recorded during the 1994 to 2000 period since the second phase of
EMU required a consolidation of government accounts, especially with the central bank. The government
had three accounts with the central bank, which were overdrawn to the sum of 3.04 trillion drachmas (about 9 billion euros), all of which had to be transformed into formal debt by the end of 1993 so that Greece could enter the second phase of EMU (see Manessiotis and Reischauer 2001 for more details). This action alone added another 16 percentage points to the debt-to-GDP ratio. In addition to these very large, debt-increasing, stock-flow adjustments, it is worth mentioning that during the consolidation period some (far smaller) debt-reducing adjustments were made. These involved the transfer of Social Security Fund’s deposits from the central bank (where they were held in its own name) to the government’s accounts, as well as the privatization revenue that was used to retire public debt. It is evident that the effort at budget
consolidation that started in 2010 will not be successful if it does not manage to reign in the creation
of the off-budget liabilities, which are still accumulating in some publicly-owned enterprises.
3.2.4 External imbalances
Bringing the government’s finances in a sustainable position is a key priority for Greece. Unfortunately,
this may not be the main problem; the very high, and rising, net foreign indebtedness may be the bigger problem.
This huge drop in the national saving rate has (since 1988) not been associated with a rise in government
borrowing, but it is wholly attributable to the decline in the private sector’s gross saving rate (from 27 percent in 1988 to 11 percent in 2008; see Moutos and Tsitsikas 2010).
The upshot of the large decline in national saving for Greece has been a gradual widening of the current account deficit and the accumulation of foreign debt (Figure 3.13).
During the recent global crisis, the share of services in total exports decreased in Greece by about 4 percentage points from 2008 to 2009, whereas it increased by about 2.5 percentage points in the EA-12. These differential movements reflect the fact that Greece was earning from transportation services in 2008 as much as from its total exports of goods (including ships and oil). The considerable slowdown in world trade in 2009 reduced Greek receipts of transportation services by about 30 percent in 2009 relative to 2008.
3.3 The crisis
The slowdown in global economic activity in 2008, and the recession in OECD countries in 2009 were the
prelude, but not the cause, of the Greek crisis.
3.4 The bailout
In October 2009, the newly elected Greek government announced that the projected budget deficit for 2009
was 12.7 percent of GDP rather than the 2 percent displayed in the Greek 2009 budget (approved by Parliament in December 2008). From this moment until the formal request for assistance on 23 April 2010, the Greek government attempted to “educate” the public about the severity of the brewing crisis and persuade itself that nothing less than the standard IMF bailout package was the only available option. As becomes apparent from the events detailed in Box 3.2, domestic political and economic considerations, including the need to persuade the traditional voters of the governing party as to the necessity of the conditionality-based bailout package, were instrumental in delaying the official recognition of the limited
choices available to the country.
....Note that none of these consolidation measures force the Greek government to save and actually reduce its debt. The measures are merely designed so as to reduce the net increase in debt.
3.5 Will the bailout package prove enough?
3.5.1 Economic considerations
external accounts data from the first nine months of 2010 suggest that the predicted improvements may not be forthcoming. Consider the (provisional) data for the first nine months of 2010 provided by the Bank of Greece.29 The level of the current account balance for January to September 2010 shows a very small improvement over the relevant 2009 magnitude; according to these data the drop of the current account deficit relative to GDP is less than 0.3 percentage points. Similarly, net exports of goods and services show an improvement of less than 1 percentage point (over the 2009 figure). The sum of the current account balance and the capital transfers balance (i.e. net borrowing in the Ameco nomenclature) shows deterioration!
The above arguments illuminate the very narrow path on which the Greek economy must tread during its
adjustment towards fiscal and external sustainability. On the one hand, in order to reduce the budget deficit,
slow down the rise in the public debt-to-GDP ratio and quickly place it on a downward trend, it needs the
reduction in GDP in 2010 and 2011 to be as small as possible, and rise fast thereafter. On the other hand,
given the absence of the exchange rate as an instrument to regain the loss in competitiveness and the
slow pace of internal devaluation, any improvements in the current account will have to rely on a sharp internal devaluation with declining prices, wages and a drop in GDP so as to compress imports. Alternatively, all hope for an improvement in the current account will have to rest on fast increases in world income and trade so as to export its way out of the crisis; the current world economic environment is not a good portent in this respect. Our back-of-the-envelope calculation (see Section 3.6.1) suggests that the “required” drop in GDP is probably much larger than what is predicted in the Memorandum.
3.5.2 Political considerations
From the moment the newly elected government appeared to understand the gravity of the situation, a
serious effort was made to reverse the widespread belief that an IMF-style programme would be politically
infeasible. The government seems, up to this point, to have managed to persuade a large proportion of the population of the inevitability of the austerity measures coming in exchange for the bailout programme. This effort was aided in no small measure by using the media to expose gross cases of tax evasion and public sector corruption (which it promised to prosecute), as well as cases of under-worked and over-paid public sector employees. Some evidence of the acceptance (albeit grudgingly) of the policies implied by the bailout package is provided by the latest Eurobarometer, which reports results of interviews conducted between 7 and 25 May in Greece, when most of the details of the bailout package had already been reported in the press (Eurobarometer 2010). In response to the statement: “In a international financial and economic crisis, is it necessary to increase public deficits to create jobs”, more people in Greece than in any other European country have stated that they disagree (for Greece, 37 percent “agree” and 53 percent “disagree”; for the EU-27, 46 percent “agree” and 36 percent “disagree”).
A crucial determinant of the political feasibility of the bailout package is the response of the trade union movement.
The political dynamics so far seem to indicate that the current government has been able to build sufficient
support for the reforms in the bailout package. Yet considerable dangers remain, as the full extent of theeconomic problems Greece faces has not been revealed to the public. It would not be surprising if the elites switched in favour of default in case they thought that their power to shape policy in Greece could be compromised by policy proposals of the outside actors that go beyond the usual austerity measures or if the economic situation turned much worse than the IMF predicts, as we fear . The elites may also find other allies in this case (in addition to the rising numbers of the unemployed): the small business owners (many of them shopkeepers with either no or just one or two employees) who suffer disproportionately from the drop in consumption spending and have small room for adjustment. The fact that both the leftwing parties and the main right-wing party are opposed to the bailout package suggests that the danger that an “unnatural” coalition may be formed in the medium-term should not be ignored.
3.6 The day after (June 2013)
The question is: What will happen if, as we expect, Greece’s problems will not be resolved by 2013, in particular if the huge current account deficit is still unsustainable? Apart from a debt moratorium, which we discuss below, there are in principle only three options.
i) Greece returns to the drachma and depreciates (external depreciation)
ii) Greece goes through an equally radical internal depreciation process during which wages and prices fall by the same amount relative to the rest of the euro area as they would have done with an external depreciation.
iii) The European Union finances the Greek current account deficit with ongoing transfer programmes.
The first two of these options are mutually exclusive, but blends of the third and either the first or the second options are possible. We will now discuss these three options in more detail.
3.6.1 External and internal depreciation: the similarities
From a political perspective a policy of exiting from the euro, returning to the drachma and allowing adepreciation to take place looks very different from an austerity programme that tightens Greek budget constraints, as less capital is flowing into the country. However, from an economic perspective the differences are smaller than may appear at first glance .
Thus the reduction in Greek GDP necessary to get rid of the entire current account deficit would be 33 percent.
3.6.2 The differences between external and internal depreciation
However, an external depreciation also has extremely problematic implications, the most obvious one being a bank run.
It is only clear that companies of the real economy will fare better after an external depreciation.
3.6.3 Transfer union
Politicians should
not overlook, however, that there is the risk of Greece becoming addicted to the transfers, since it seems to have become addicted to the capital flows of the past.
...For these reasons, the EEAG is sceptical about replacing the capital flows with transfers that involve more
international redistribution in the European Union or the euro area. Instead it argues for helping out Greece under the general rules specified in Chapter 2 .
3.6.4 Necessary tax reforms in Greece
Reforms of the tax system are the most urgent of all.
3.6.5 Greece does not graduate in time – another bailout package in 2013?
It is important in this context to note that no majority decisions of the European Union will be sufficient
for a continuation of the bailout programme. After all, the agreement of the EU countries on 16–17 December
2010 (see Chapter 2 for details) explicitly rules out the use of Community instruments with majoritybased decision-making for this purpose, and the intergovernmental help as specified in the decisions of May 2010 were illegal, as French Finance Minister Christine Lagarde has declared, implicitly confirming a rumour that the German Constitutional Court required a treaty change because the decisions were illegal.35 All will depend on how the envisaged reform of the Community treaty will be designed.
In Chapter 2 we have given our proposals for specifying the decisions of 16–17 December. In principle we foresee a three-step procedure, with liquidity help in the first stage, a breakwater procedure that avoids full insolvency in the second stage and full insolvency. There is a good chance that Greece will be able to find new funds in the capital market if it is able to offer the new CAC bonds, which offer the privilege of being convertible, after a haircut, into partially secured replacement bonds should Greece not be able to service them. As this limits the possible loss to investors, it will be possible to sell these bonds in the market if they are endowed with an appropriate and limited interest rate spread over safer assets.
Should Greece nevertheless not be able or willing to issue such bonds, it might have the chance of receiving more liquidity help from the new European Stability Mechanism (ESM) for a limited time span under the rules we have specified.
If not, it will have to reach an agreement with its creditors about restructuring its debt, perhaps using partially
secured replacement bonds under the rules we have outlined. The ESM agreed on 16–17 December 2010 could help, as we have pointed out, but only after private creditors have agreed to a haircut. Politically, the question of whether or not Greece will or should exit from the euro area will depend on which of these choices are made, but from an economic perspective it is a separate issue, as we have argued above. Greece should make this decision based on its judgement of whether or not an internal or external depreciation will bring about less hardship.
_______________________________________________
H ANAΛΥΣΗ ΕΙΝΑΙ ΠΟΛΥ ΚΑΛΗ και νομίζω πολύ κοντά στη πραγματικότητα.
Διαφέρει από τις ερμηνείες και το "φτιασίδι" που βάζουν τα ΜΜΕ αλλά και από τα συνοπτικά συμπεράσματα.
Με δύο λόγια: το βασικό πρόβλημα είναι η ανταγωνιστικότητα, η οποία περνάει κυρίως από το αποτέλεσμα εισαγωγών-εξαγωγών αλλά και ροής κεφαλαίων.
Οι τρόποι άμβλυνσης του προβλήματος είναι δύο:
Α-Υποτίμηση [εσωτερική (που ακολουθείται) - εξωτερική] - οι ελίτ αυτή τη στιγμή είναι με την "εσωτερική" καθώς θα χάσουν τα περισσότερα εκτός, οι μικρές εταιρείες είναι αυτές που θα κερδίσουν εάν υπάρξει έξοδος από το ευρώ
Β-Μεταβίβαση πόρων από το Βορρά (ΚΠΣ ή κάτι άλλο)
Το Α δεν αποκλείει το Β. Το Β το αποκλείουν οι Γερμανοί.
Οι πιθανότητες να αμβλυνθεί αλλιώς είναι μικρές.
Η πολιτική και οικονομική στρατηγική της κυβέρνησης (και των ελίτ) είναι, αυτή τη στιγμή:
Δάνειο €110δισ/επιμήκυνση-μικρότερο επιτόκιο. - μόνιμος μηχανισμός στήριξης (καθώς εν διορθώνεται το πρόβλημα σε μια μέρα με υποτιμήσεις) - όχι "κούρεμα"/αναδιάρθρωση - παραμονή στο ευρώ
υ.γ. κριτική:
το report, σε σχέση με το χρέος και τα ελλείμματα, αποσιωπά ορισμένες κρίσιμες πτυχές, όπως οι μεταφορές κεφαλαίων από τα εξοπλιστικά [περί τα €90δισ. υπολογίζονται οι στρατιωτικές δαπάνες 1996-2009-http://milexdata.sipri.org] ή μικρότερα μεγέθη που σχετίζονται με τις προμήθειες του δημοσίου και των φορεών του και έχουν δοθεί μίζες για να παρθούν οι δουλειές, ενώ αφιερώνει μικρό μέρος στην επίπτωση της διοργάνωσης των ΟΑ 2004 [επίσημα €12δισ. ανεπίσημα €20δισ. ή και €30δισ.(Εκτιμήσεις ανεβάζουν το τελικό κόστος μεταξύ των 20-30 δισ. ευρώ αν συμπεριληφθούν δαπάνες που δεν θα γίνονταν ποτέ ή θα περνούσαν από λιγότερο ταχύρρυθμες διαδικασίες αν δεν υπήρχε η χρονική πίεση και ο μεγαλοϊδεατισμός της Ολυμπιάδας - http://www.enet.gr/?i=news.el.article&id=140838), (On November 13, 2004, the Greek embassy estimated the costs of hosting the Olympics at €8.954 billion (about $11.2 billion in 2004) not including construction made regardless of the Games, but including 1.08 billion Euros ($1.35 billion) in security costs.-http://en.wikipedia.org/wiki/2004_Summer_Olympics)] αλλά και άλλων διοργανώσεων-πρόβες. ΟΛΑ ΤΑ ΠΑΡΑΠΑΝΩ ΑΠΟ ΠΟΥ ΤΑ ΠΡΟΜΗΘΕΥΤΗΚΕ Η ΕΛΛΑΔΑ;
Μικρό μέρος αφιερώνει και στις μη-επανεπενδύσεις των κερδών όσων πλούτισαν στο κορμί της χώρας και έβγαλαν τα λεφτά έξω, όπως γίνεται με το σε slow motion bank run του 2010 ή τα ..€600δισ. στην Ελβετία...
Τσιμουδιά επίσης και για τους φόρους που πληρώνουν οι ..εφοπλιστές.
No comments:
Post a Comment