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Greek Budget Office: Automatic Contingency Triggers Unavoidable Without Institutional Changes

A development plan is necessary for Greece if it is to avoid veering away from its targets, thus setting the automatic the contingency mechanism into effect. Greek Parliament’s Budget Office Coordinator Panagiotis Liargovas said that political stability is one of the preconditions for development.
He stressed that the automatic contingency cuts would inevitably be activated if the government does not manage to combat tax evasion. The 99-year condition placed by creditors regarding the super privatization fund of Greece’s assets shows a lack of trust. Liargovas believes that such a condition would not have existed had Greece met its targets in the past.
Professor Panos Kazakos, a member of the Budget Office’s scientific committee, expressed reserved optimism for the future. “We are the only country going from memorandum to memorandum,” he said, adding that institutions need to be overhauled and modernized. “If the new development law is accompanied by tax incentives, it would be a step forward as it would send a message of stability to the business world,” he said.
Kazakos points to different scenarios that could pan out for Greece:
(1) A “defensive” approach with fiscal consolidation and reforms while also trying to “salvage things from the past”;
(2) Correcting the way in which the Memorandum is applied for a speedy return to growth;
(3) Clashing with partners and a Grexit from the Eurozone, and a return to the drachma, elongating the crisis.

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