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Greece will be forced to resort to 35-percent haircut on its debt in 2012, said the analyst of Economist Intelligence Unit Megan Greene. She also said that she expects social protests, inability to pursue reforms and fiscal discipline. Return to the markets in 2013 will be difficult. The burden of payments should be shared with someone else. She recalled that the country has the highest debt as a percentage of GDP than any other EU member country and it will continue to grow in the coming years.

Paul Thomsen, Deputy Director for Europe and head of the IMF mission to Greece, said in turn they were constantly criticized for not having undertaken any magical measures to stimulate economic growth so that Greece does not go through this period of recession and unemployment. This is an illusion. There is no such path. He stressed that the program is followed and we are moving on schedule. But there are signs of problems that must be taken into account. We are at a crossroads. We need more reforms. Paul Thomsen recalled that this year the deficit reached 9.5 percent of GDP, i.e. 6 percent reduction in a period when the economy shrank by 4.5 percent. The government decided the next year’s reduction to reach 7.5 percent of GDP. This is extremely ambitious goal in all international standards. In his opinion the upcoming health care reforms and the liberalization of the labour market are inevitable and difficult, but the good news is that the Greek government is determined to implement them.

Greece has no alternative to reforms – this was the common opinion of the participants in the conference Keeping the Euro Alive – Greece’s Economic Recovery, organized by the Economist magazine. Financial experts, bankers, businessmen, politicians and journalists took part in the forum, which takes place in the most difficult times for the common European currency. There are two questions troubling the analysts: Can the euro survive given that there is such a serious imbalance between the countries in the Euro zone and Can the euro survive without political union behind. Immediately after that the next logical question is - if the Euro zone collapses, what will be the consequences for member states. For now the crisis is withheld due to the alliance between Berlin and Paris and the IMF, but how long can this continue? These were the focus topics of the discussions participated by key figures in the financial life of the world.

Commissioner Olli Rehn, Commissioner for Financial Affairs of the European Union, noted that the European Monetary Union was projected in the 1990s, it was implemented during 2000 and it should be reformed now in 2010. Disparities within the EU have increased throughout this time. He admitted that the financial stability of the euro is going through difficult times. Greece is not alone in facing these challenges. Ireland also requested financial support and undertook a program of fiscal stabilization and consolidation. The European Union as a whole requires measures to reform the economic governance but a rigorous and general determination is necessary for their success. Olli Rehn stressed that imports in Greece consistently exceed exports, the Greek competitiveness dropped by 20-30 per cent in the last 10 years. That is why the export of Greek goods and services is constantly deteriorating. But Greece is not the only country experiencing such problems. Therefore, the finance ministers of the Euro zone countries have adopted a permanent mechanism for fiscal stabilization.

The Commissioner for Financial Affairs proposed penalties for the countries that do not comply with the economical and financial rules of the Euro zone, but they should be imposed before the countries enter into crisis and have a kind of deterrent effect. He also said that the Greek reform program has no alternative. The second mission confirmed the impressive fiscal consolidation in the country. Financial stability is restored. The next step is to make the labour market more flexible and to support entrepreneurship. A solution to the problem of tax evasion should be found - not just to fill the treasury, but also to restore social justice. He stressed that the European Union recognizes the efforts of Greece and will therefore defer its payments of the financial support of 110 billion euros.

The Financial Minister George Papakonstantinou in turn recognized that it was known still in the beginning that the system established in Greece would not hold and that one day it will happen what happened. The reaction of the Euro zone is fully understandable. Greece acted beyond the rules of the union and found itself in front of the closed doors of the international markets. So, the country faced the unprecedented financial support of 110 billion euros from the European Union and the IMF.

He stressed that the Euro zone is experiencing several key problems now and it should find a solution: 1) consolidation of public finances and imbalances within the Euro zone. Debt in the Euro zone is about 80 percent of the total GDP. It has increased by 10 per cent for one or two years. This means that there is a more general problem with the public finances in the Euro zone. Therefore, the criteria for deficit and debt have become more stringent. This is a step in the right direction. It's not about penalties but about closer monitoring and supervision. 2) What is the support mechanism of the Euro zone for a country on the verge of crisis? How and under what criteria will this permanent mechanism work for fiscal stabilization? All agree that it should exist, but there are big differences as to whether the private sector should be included in it. 3) Reform of the banking system in Europe and then worldwide. In the case of Ireland, problems began in the banking sector. This means that the future of the Euro zone depends not only on public finances. One suggestion is a tax on banking transactions with which to form a kind of a mutual fund that can be used in case of crisis. 4) The economic growth on the European Union level, which is quite low.

The Financial Minister of Greece described the problems facing the country, noting that Greece has no other alternative than the euro. Local currency would mean a lower standard of living, less investment, less stable finances. Unemployment can not be reduced without economic growth. There is no economic growth without investment, and investment will not come before the markets open. Markets will be opened when the confidence in the financial system in Greece is restored and this is the first problem to be solved. But is this enough? It is not. There must be competitiveness.

Vassilis Rapanos, president of the National Bank of Greece and the Greek Association of Bankers admitted that he was dealing with the Greek economy for 30 years and came to the conclusion that if there are no stable and effective institutions, the chances to emerge from the crisis are limited. A lot has been done but much remains to be done. He stressed that Greece should have an independent tax administration system to eliminate tax evasion. It should be simple, procedures should be simple, and taxes should be permanent, not increased every day. Only then, according to the banker, the tax system will be trusted. He concluded that the assistance of the IMF will be very valuable in the reform of institutions. Vassilis Rapanos also said that the Greek society is currently of independent means and this should change.  

Many experts from different countries spoke at the forum as they see the Greek crisis differently. According to Lawrence Howell, CEO of EFG International, the economic crisis is not of great concern, it should be overcome. What is more troublesome is that the lessons Greece learned in recent months will easily be forgotten. Generally, he believes the euro will give way to the dollar, which will become the next global currency. However, the opposite is the opinion of Elga Bartsch, Chief European Economist at Morgan Stanley. According to her, the USA budget deficit next year will be two times higher than the average for the Euro zone. In her opinion the debt crisis in the Euro zone is a catalyst for a deeper economic union. She also said that markets do not reject anyone for a long time unless they are treated as bad as Argentina treated them.