While hailing progress in implementing reforms – many others remain stuck in limbo – Greece’s economy is still in such dire straits that the government should be allowed by its international lenders to write off much of what it owes them, the head of the Organization for Economic Cooperation and Development (OECD) said.
The Paris-based group’s Secretary General Angel Gurria, after meeting in Athens with Prime Minister Antonis Samaras, said the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) must find a way to make the country’s debt sustainable “as soon as possible.”
That came after Deputy Prime Minister Evangelos Venizelos, the PASOK Socialist leader, said the debt is sustainable although Gurria said it will remain at high levels through this decade and as many analysts said Greece simply can’t pay back all the $325 billion it owes for two bailouts.
“We are half a decade into the longest, deepest economic crisis that we have known,” Gurria said. “But there is hope on the horizon: 2014 promises to be a turning point for Greece,” he added, though the OED report predicts a 0.4 percent contraction in the economy next year. Greece and its creditors anticipate a 0.6 percent gross domestic product rebound in 2014.
“I hope I am wrong and the [finance] minister right,” said the 63-year-old Mexican economist, referring to Greece’s finance chief Yannis Stournaras who said the economy will start to recover next year, a goal many analysts said is unattainable.
The OECD report expects the Greek debt to reach 157 percent of GDP in 2020, against a target for 124 percent, due to deflation and the size of the recession, stressing that further action is needed to lighten the load. “One more request. And I will make it in capital letters: Let’s do it as soon as possible,” said Gurria, calling for a reduction to the country’s debt.
That has been flatly ruled out by German Chancellor Angela Merkel whose country backs the bailouts but only on condition of unrelenting austerity measures. If Greece is allowed debt relief, the taxpayers in the other 16 countries of the Eurozone, including Germany, would have to pick up the tab for generations of wild overspending by Greek governments.
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