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18 October 2017
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Greece is developing again

27 December 16 | Marcel Fratzcher
Marcel Fratzcher

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"2017 will be a year of political, economic and social uncertainty because nobody knows what will evolve from the elections in the EU countries. However, I am optimistic for Europe and for Greece, Italy and Spain because a large number of reforms have been implemented, said president of the German Economic Research Institute Marcel Fratzcher to Athens Macedonian News Agency adding that the first results are already visible

 

The Greek economy is recovering and Greece is developing again. The growth rate is low as it is in Italy but there are serious reasons indicating that the growth can be accelerated in the next year and afterwards. My hope is this acceleration to be faster than what it is now" he said.

"Greece is a wonderful country which I deeply admire and in a number of issues is very rich" he added and explained "In culture, in quality of life and innovative minds.

Greece has made progress in the reforms but be we can't fool ourselves that they will be completed in 2018 with the conclusion of the third programme but in 10-15 years because Greece's major problem is the state mechanism. Greece must have a state that will operate, where all the citizens will pay their taxes and will allow investors to take a license without lengthy bureaucratic procedures.

In the short term Greece's public finances should be consolidated in order in one to one and a half year to set them under control, to have a perspective in order to not depend on is lenders any more. Referring to the Christmas bonus to the low pensioners and the freezing of negotiations for the debt relief, Fratzcher said "This disagreement is ridiculous. It is indicative of the real problem, the lack of confidence from both sides. I imagine that the lenders would not disagree if it was agreed openly and with transparency". 

The main issue according to Fratzcher is "if the 3,5 pct primary surplus is realistic" underlining that "if Greece grows by 2 to 2,5 percent it is", adding however that "the problem is how we will have this growth rate when there is the debt burden".

He had proposed "one and half year ago the interests to be linked with the growth" because if there is no growth Greece will not pay but if there is growth it will be able to pay the interests. In Brussels and Berlin listened to this proposal but they said that "it is politically difficult to be implemented».

From an economic point of view this compromise is feasible because what happens right now with the interests is useless. These interests are linked with the growth in Europe, with the market and not with Greece's growth rate. In my opinion this is the mistake and Greece should, according to our proposal, to get rid of this burden in these difficult times. It should pay part of the interests and only in times when growth is recorded in the country", he said.

This is a form of relief for as long Greece is having difficulties but when its economy records dynamic growth, it should pay 1/5 or 1/4 or its growth to interests to its lenders, he claimed noting that this way there will not be any arguments with the lenders as the one with this small Christmas bonus which destroy the trust and are bad for all. Both sides should be smarter in such matters" said Fratzcher.

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