Greece is carrying out the toughest austerity program in Europe. The people have endured heavy taxes and abrupt cuts in pensions and wages, thus, managed to reduce the primary budget deficit from € 24.7 billion in 2009 to € 5.2 billion in just two years. Primary expenditure has fallen by 16.4% since 2009 with cumulative cuts in Nominal Public Sector wages over 30% and Greece managed to regain some of her competitiveness lost during 2000-09. Apart from fiscal consolidation and competitiveness recovery, under pressure from the European partners, the Greek Parliament has voted a number of reforms, including: labour Market reforms with 22% to 32% reductions in minimum wages; pension and social security reforms setting effective retirement age to minimum 65 years and minimum contributory period for a full benefit to 40 years; the legal framework for the liberalization of closed professions; a new Investment Law since February 2011; launching of landmark privatizations. However the program has repeatedly not succeeded in its declared objectives. Both on fiscal consolidation and structural reforms as well as on the growth rate as the unprecedented unforeseen recession, has entered its fifth consecutive year. The delayed implementation of the agreed structural changes, the overemphasis on tax raises instead of expenditure cuts, combined with the ambiguity regarding Greece’s future in the Eurozone, led to a major loss of confidence inside Greece, a freezing of new investments and the general suspension of new economic initiatives, as well as to the mass flee of capital abroad. The country is becoming poorer and poorer with higher and higher rates of unemployment (21%) and too many inactive economic resources. On 21 June 2011 ALDE presented a comprehensive proposal for Greece's exit from the crisis. In the preamble of this proposal it was stated that the strategy that is being followed for Greece is not comprehensive enough, insufficient, it "comes after the events", it does not convince the markets and it creates confusion and uncertainty regarding the future of Greece in the Eurozone, something extremely harmful both for the Greek economy and the Eurozone as a whole. ALDE also suggested an alternative comprehensive economic and political approach which included among others: Wider consensus in Greece
Faster fiscal consolidation
Reduction of the Greek interest rates to 3.5% and restructuring of the Greek public debt held by the private sector Longer time frame for the privatization program which was aiming at 50bn EUR revenues in only five years Investments’ guarantee in Greece through the European Investment Bank and through resources from National Strategic Reference Framework that will be made available for this reason A long term program of institutional and administrative reform with technical help from the Community Institutions These proposals were adopted -some of them with much delay– both in the consecutive European summits that followed as well as through the creation of a coalition government in Greece and the creation of the Task Force. Unfortunately the rest of the ALDE proposals, which included deeper structural reforms and expenditure cuts, a special investment initiative for Greece and a reduction of taxes for businesses to stimulate growth, were not implemented The second rescue package - which is based mainly on the questionable reduction of salaries in the private sector - and the recent debt restructuring might render the Greek debt sustainable (the final outcome depending on many uncertainties and extremely vulnerable to external shocks), but are not sufficient to lead the country on the road to recovery; they create the foundation for growth which is fiscal consolidation, but they are missing the necessary tools to stimulate growth. Unless the economy recovers from severe depression, Greece will not be able to deliver her commitments toward its European Partners. Therefore our main concern today...
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