The Wall Street Journal
By ALKMAN GRANITSAS
ATHENS—Greece's top central
banker called on the government to speed up efforts to close the budget gap
amid growing concerns elsewhere in Europe that Athens can't pull itself out of
its debt spiral.
Bank of Greece Governor George
Provopoulos said that the lack of fiscal and other reforms were deepening
Greece's recession.
"The developments in the
real economy are truly dismal," Mr. Provopoulos said in an interview in
the Kathimerini newspaper. "In my assessment, the recession would be
shallower if the reforms progressed quicker, if fiscal deficits were reduced
more drastically and if competitiveness were improved."
Efforts in these critical
areas must now be focussed with greater decisiveness, boldness and
effectiveness, he said.
Many Greeks worry that more
and accelerated austerity measures will only deepen the country's recession,
making it even more difficult to cut budget deficits. Government officials
believe the country's budget deficit will overshoot its 2011 target of 7.6% of
gross domestic product.
Talks between Greece and a
visiting "troika" of international inspectors were suspended last
week amid a dispute over new government cutbacks and their impact on the
country's recession. The troika is made up of representatives from the European
Commission, the European Central Bank and the International Monetary Fund.
The talks, which are to resume
Sept. 14, were set to win the troika's approval of the next installment from
Greece's bailout agreement set up last year.
Senior Greek government
officials said the troika is asking Greece to take an additional €1.7 billion
($2.42 billion) worth of new austerity measures this year.
The troika estimates that
Greece's deficit will reach 8.8% of gross domestic product in 2011. The
government blames a deeper-than-expected recession for its inability to meet
budget targets, saying that the deficit will be around 8.2% this year, and that
existing measures are enough to close the gap.
Greek officials also believe
that the country's economic recession could stretch into a fourth year in 2012,
extending the pinch on businesses and households that have made the series of
spending cuts and taxes over the past year-and-a-half so unpopular.
Two public opinion polls
published Sunday showed that the center-right New Democracy opposition party
has widened its lead over Prime Minister George Papandreou's governing
Socialist party.
According a poll in the Proto
Thema newspaper, New Democracy leads the Socialists by 4.8 percentage points,
while a second poll in newspaper Real News showed a 5.1 percentage-point margin
in favor of the conservatives. In June, the opposition lead was between 1.4 and
4 percentage points.
Officially, the government
will not call snap elections for a new mandate and will hold power at least
until the end of its current term in 2013. But political analysts believe the
government could be forced to bring elections forward if public pressure
against promised overhauls grows. As it is, the stalled reform efforts in
Greece is generating growing impatience with Athens in other euro-zone
capitals.
German Chancellor Angela
Merkel continues to express support for Greece and broader plans to build a
bigger and better bailout facility for euro-zone governments running into
financial trouble. But she faces growing frustration inside her own Christian
Democratic Union party.
On Wednesday, the German
constitutional court will rule on the legality of expanding the powers of the
European Financial Stability Facility, the future key to supporting Greece and
other financially frail countries.
The court is expected to
approve the measures, but might attach conditions such as an increased
parliamentary say in future rescues.
Its ruling also could
influence German parliamentary debate on the government's support for widening
the scope and lending capacity of the EFSF.
Write to Alkman Granitsas at
alkman.granitsas@dowjones.com
No comments:
Post a Comment