Editorial: Red alert for the economy
With the economy trapped in a polarised pre-electoral climate, there is a significant chance of back pedaling.
Yesterday’s meeting between Finance Minister Euclid Tsakalotos and Bank of Greece Governor Yannis Stournaras just two days before the European Commission’s report on the Greek economy reveals the government’s concern over the problems that lie ahead, the most important of which is the looming problem of non-performing loans (NPLs) that has burdened the banks and the economy in general.
The fact that the government and the central bank agreed to form a joint task force to thresh out the plans of the Bank of Greece and of the Hellenic Financial Stability Fund, which can complement each other in addressing the problem, demonstrates that European Authorities have not yet been convinced by the government’s plan.
Obviously, the government wanted to avoid at all costs objections in the Commission’s report regarding the course of the economy, so as to ensure disbursal of the one billion euros that Greece is to receive from European central banks’ profits on Greek bonds and to avert a negative climate ahead of Athens’ planned issuance of a seven-year or ten-year bond.
The delays and problems are a given and so the government’s economic team sees the difficulties more clearly and is seeking the support of Mr. Stournaras. Tsakalotos’ stance contrasts sharply with that of other ministers and the PM himself, who spoke of over-estimated technocrat bankers.
Mr. Tsipras must at some point decide if he will become a European Social Democrat – as he has depicted himself for some time with efforts to build bridges in order to fashion a progressive political pole – or whether he will again resort to his old tactic of opportunistic choices and easy, hollow pledges.
With the economy trapped in a polarised pre-electoral climate, there is a significant chance of back pedaling. That danger is increased by the government’s indecisiveness, ideological fixations, and partisan electoral aims.
However, neither the economy nor society can withstand more games at their expense and this should be understood while there is still time.