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  • Editorial: Benefits or investments and growth?

    To ensure a better future for the country and its citizenry one needs a growth dynamic and not the distribution of paltry benefits.

    Speech by the Governor of the Bank of Greece Yannis Stournaras, at the 2nd InvestGR forum, in Athens, on June 11, 2019 / Ομιλία του Διοικητή της Τράπεζας της Ελλάδας Γιάννη Στουρνάρα, στο 2ο Φόρουμ InvestGR, στις 11 Ιουνίου, 2019

    Once again we are witnessing pledges of a host of social benefits, and area in which Prime Minister Alexis Tsipras is by far the champion.

    Undaunted after the benefits he handed out on the eve of European and local elections on 26 May failed to woo voters, he is still making promises in an effort to halt his party’s downward spiral.

    As pleasant as these pledges may seem at first blush, one must consider their cost given the fact that money trees do not grow in Greece.

    Bank of Greece Governor Yannis Stournaras warned yesterday that the super-primary surpluses (the amount beyond the 3.5 percent of GDP agreed to with creditors) that the government had achieved and used to cover its handouts are over.

    The Central Bank projects a 2.9 percent primary surplus for 2019.

    SYRIZA’s conscious choice of draining the economy and households in order to play the role of protector of the poor has exceeded all limits.

    If one does not want to return to the wayward past, one must realise that public finances have reached the limit.

    To ensure a better future for the country and its citizenry one needs a growth dynamic and not the distribution of paltry benefits.

    It is irrational in the current conditions of stagnation and continuing crisis for public investment to be constantly dropping.

    The country urgently needs productive investments (mainly private but also public) that can fuel strong growth.

    The rally on the Athens Stock Exchange and the falling spreads on Greek bonds in recent weeks demonstrate that an opportunity exists, as long as the next government can free itself from the prevailing sins and ideological fixations.

    The steps that must be taken have been exhaustively described and analysed and are well known.

    As Mr. Stournaras stressed yesterday, one must put an end to the bureaucratic red tape, the counter-incentives, the unstable legal and institutional framework, constant changes in the tax system, and the delays in the justice system.

    Now, one has an opportunity to offer incentives for investment, for an improvement in productivity, for a rise in the employment rate, and for reforms that will increase the economy’s competitiveness.

    One need not re-invent the wheel. Common sense, planning, and strong political will are needed to turn a page at long last.

    The opportunities exist. It remains to be seen if we can exploit them.

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