Brussels, 28/11/2013 (Agence Europe) - In Athens on Wednesday 27 November, after submitting an OECD report to Greek Prime Minister Antonis Samaras, OECD Secretary General Angel Gurria called on the EU to find a way to reduce the Greek debt burden as quickly as possible. The report forecasts a seventh year of recession for Greece in 2014 and colossal debt until 2020, in contradiction to the troika's projections (European Commission, European Central Banka and International Monetary Fund).
At a press conference, Gurria said: “I hope I am wrong and the minister right”, referring to the Greek finance minister's growth forecasts. The OECD expects GDP to fall by 0.4% in Greece in 2014, but then to bounce back slightly in 2014. The troika is more optimistic, expecting growth of 0.6% of GDP next year.
The OECD paints a darker picture of Greek public debt. It expects debt to continue to rise until 2015 and then to fall to 157% of GDP in 2020. The OECD says that, for the troika's figures to materialise (debt/GDP ratio of 124% in 2020), Greek GDP would need to rise by 4.8% a year from 2014 to 2020. The report comments: “Such a rapid and sustained pace of growth is very unlikely”.
The OECD points out that 84% of the Greek debt is owned by institutional lenders. It says that the aid promised by the eurozone in November 2012, as long as a primary surplus is made, “would need to be large enough to reduce uncertainties and revive demand”. The eurozone's approach of reducing the interest rates and extending loan maturity dates would make it possible to reduce the financing for the debt and provide the economy with the breathing space it needs to grow at a faster pace, according to the OECD. Gurria said: “One more request. And I will make it in capital letters: Let's do it as soon as possible”.
Europe is biding its time, waiting for the spring of 2014 for Eurostat to confirm whether Greece achieved a primary budget surplus in 2013. A high-ranking European official recently said that talks might be in June, but the danger is that the May 2014 European elections take precedence and the question is not discussed until there is the new European Commission in place in November.
The OECD warns that the aid must not be a substitute for structural reforms, and calls for full implementation of the structural adjustment programme, particularly the privatisation side, liberalising the product market and reforming the civil service. (EL/transl.fl)