Greece could tide over economic crisis through speeding up reforms

11:08, October 09, 2010      

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Ten months after the outbreak of the acute debt crisis in Greece which sent shockwave beyond the borders of the eurozone member country, the Greek government expresses confidence that in a three-year period Greece will exit out the dark tunnel and return to growth and prosperity.

The country seems to have left default far behind, held local analysts such as Giannis Stournaras, Director of the Greek Foundation of Economic and Industrial Research. They noted that there are still major challenges ahead and Greece needs to change dramatically, without wasting more time in order to achieve the target set.

Next year will be the decisive second half in the battle to put the national economy in order, step off the deep recession and continue on the course of development, said Greek Prime Minister George Papandreou this week, as his socialist ruling PASOK party marked the first anniversary in government after last year's general elections.

Burdened with a budget deficit which was estimated to stand at 13.6 percent of GDP in late 2009, as a result of years of mismanagement of finances, Greece narrowly escaped bankruptcy this spring.

Athens resorted to a newly created safety net of the European Union (EU) and the International Monetary Fund (IMF) which eventually decided in May to financially support Greece with 110 billion euro (152.6 billion U.S. dollars) over a three-year period in order to avoid severe repercussions in the global economy, such as a domino effect across Europe.

In exchange of the financial assistance, Papandreou's government which accused the previous conservative government of hiding the extent of the problems, pledged to fully implement with no delay a harsh austerity stability and growth program.

The program includes cutbacks on salaries of employees in the overblown public sector, reaching up to 25 percent of their income, as well as cutbacks on pensions and a string of tax hikes ranging from fuel and electricity bills to transportation costs, tobacco, alcohol and basic food products.

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