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Victoria Mindova

Troubled are the waters of the supervisory Troika’s inspections and they are hardly to clarify because the Greek government gives strictly controlled information about the attitudes of the supervisors. The mood around the meeting of the Greek government's obligations under the Memorandum of financial aid is hard because it is believed that the planned reforms remain only on paper.

The representatives of the International Monetary Fund, the European Central Bank and the European Commission require the legal changes in public administration and state structure to be put into practice. Objectives such as market liberalization, reduction of civil servants and significant cuts in spending are still lagging behind. The recovery of public enterprises, such as urban transport and public railways are also late, which is drawing vital resources from the budget. The Troika severely criticized the early retirement of a large number of employees in the broader public sector, prepared for this year.

In this sense, the government justification that it has difficulties to reduce the deficit as agreed with the Troika because of the high cost of recession seems unfounded. At the beginning of the year, the supervisors along with the government had determined that the recession would move about 3.8%. Reality showed that the reduced income and lower revenues in the budget would help the recession exceed 5%, which "eats" the effect of the cuts made so far. However, the Troika does not agree to renegotiate the 2011 objectives to reduce the budget deficit. The task of the Prime Minister George Papandreou and the Minister of Finance Evangelos Venizelos is to lower the deficit to 7.5% of GDP from 10% of GDP at the beginning of the year.

The Troika insisted again on the acceleration of mergers or closures of unprofitable public institutions without lengthy procedures for evaluating their employees. Only then immediate cost savings of these organizations and in the budget would be achieved. As for public sector wages, the supervisors insist on putting a ceiling that will apply to all as well as on removing the scheme of the basic salary allowances. New appointments in public administration remain one new job for every ten dismissed or retired. This measure will certainly apply to the end of the austerity plan until 2015.
 
The delays in the recovery program could be offset by accelerating the privatization and making significant costs cut. Furthermore, some of the measures planned for the first quarter of 2012 will be applied earlier to cover the time lost. Among the emergency measures is the early withdrawal of the state share in Hellenic Petroleum, which is currently estimated at 35.48%. From this transaction, the government expects to receive around € 600 million to fill part of the hole in the revenue budget.

The Troika’s visits to the Greek ministries showed that the recovery of the local economy would not get away without improving the business environment in Greece. The supervisors required easier procedures for issuing permits for activities as well as more accessible and simpler tax system that favours the opening of new companies. The Ministry of Regional Development and Competitiveness is preparing a plan for the establishment of Hellenic Investment Bank. Its accumulated funds will come from private capital and it will finance long-term projects in the green economy, energy and tourism.