A “growth contract between Greece and its official creditors is needed” for the country to resume “strong and inclusive growth” and continue restructuring its economy said Plutarchos Sakellaris, Professor at Athens University of Economics and Business and Director of the Laboratory of Economic Policy (EMOP) today at an EIB Institute seminar.
This growth contract would have “four pillars” continued the former Vice-President of the EIB. The first pillar would be multifaceted reforms targeting the public sector -“the sick man of Greece’s economy”-, land registry, land use management, the tax code… This should be accompanied by “less fiscal austerity, possibly coupled with a restructuring of public debt” he suggested adding that loans from the European Stability Mechanism could substitute part of the loans due to the International Monetary Fund. The Greek banking sector “needs to be fixed” and the “worrying level of non performing loans” needs to be addressed.
Last but not least, there is a need to “promote investments” -the share of investments in GDP has fallen to 10% from 23% of GDP before the crisis- and international financial institutions such as the EIB “must play a role” said Mr Sakellaris who proposed that the EIB sets up a “EUR 4 bn special recovery fund for Greece” to be used to guarantee “green-field investments, trade credit for SMEs and privatizations”.
“Greece is facing destiny” concluded Mr Sakellaris adding that “success will depend on how hard Greeks work”.
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