This morning Greece's new government sent a letter to the Eurogroup describing the reforms it intends to implement. The text can be found on the internet, a sample reference is provided at the end. I will make only two key points:
A. Dramatic qualitative change: This is the first and only time that a Greek Government has taken ownership of a program. This is no longer something being dictated from foreigners which the greek government will do everything it can to circumvent implementation, as happened for 5 years now. Hopefully...
B. Content: This looks like unfortunate program #1 of the spring of 2010 which was only 1/4 implemented. That program had four axes: tax more/transfer* less, spend less, reform public sector, liberalize markets. It has differences, but the direction is the same. Yet program #1, due to being imposed and not owned by the Greek government, resulted in only one thing being done: increased taxes and cut transfers (where public sector wages should be viewed as mostly transfers...).
* Transfers in this case means all government revenues and payments which are related to non funded policy schemes with accumulated liabilities such as pensions, mandatory health insurance, and employment obligations. So transfer less means either increase social security contributions or decrease payments for health, pensions and non-market/non-productive salaries.
Sample reference: http://clamo.ftdata.co.uk/files/2015-02/24/GREEK%20GVT%20REFORM%20AGENDA.pdf
IMO golden rule always applies:He who has the gold,makes the rules.
ReplyDeleteYes the government can make suggestions,and some of them might be heard.
For the time being,both ECB and IMF demand more blood ASAP.