After constant delays, infinite strategy errors and endless sacrifices by the Greek people, public finances appear to be on a steady path to recovery.
There are many signs confirming that state deficits tend to be under control, thus allowing a more stable management of public finances.
Regardless, controlling the deficits is not enough to solve the many problems in the country. So long as the Greek economy is plagued by doubts over its debt viability, the uncertainty of growth and the banking system inefficiencies, the repercussions of the crisis will not only not be mitigated, but in the midterm they will subvert any progress in finances.
The question for the Greek economy is not to simply control deficits and reset the recession, but to create the conditions for a 3-4% annual growth rate.
Only that will keep the deficits under control in the long run, ensure the debt viability and allow the economy to gradually cover the employment gap, which is weakening, immobilizing or driving away the younger generations away from the country.
If the Greek economy moves on from a long-term recession to an equally long and stagnant period of a 1%-1.5% growth rate, then the game is lost.
The transition from the reducing deficits to a greater growth strategy is more crucial than ever.
In this sense, the renegotiation of the debt is critical for its viability. The discussions in Brussels must intensify, so that a quick return to the markets will allow a breath of air.
Truth be told, Greece is suffering from a lack of funding sources, the necessary oxygen to turn the great reform into a growth opportunity.
To rebuild, Greece must chose sectors, areas and activities and facilitate businesses – which have merged, been sold off or restructured – to adjust to the new conditions.
Only that cannot happen with a bound banking system, which is sitting on top of 70-80 billion euros worth of red loans that it is having trouble dealing with in a dynamic fashion, like the circumstances demand.
That is because the ranks of the banking system are dominated by guilt, which does not allow the necessary flexibility and dynamism required by reform. It is objectively difficult for those who gave out the loans to implement the restructure plan.
The times demand new ways of managing red loans and new, specialized organizations which will be capable of creatively handling the problems of the private sector.
At present critical sectors of the economy, such as steel, fishing, coasting, hotels, retail and services, are literally on life support.
They are sectors with excessive loans, limited job opportunities, inadequate funding and the reform is either nonexistent or – at best – slow. For better or for worse, the banks cannot succeed alone and if they make an effort, it will be slowly and reluctantly.
In conditions as such, radical choices are needed – the only kind of choices capable of offering the growth strategy which the country lacks.
Finding international investors is a given, but not enough. Without quick reform procedures and changes to the public and private sectors, there can be no growth momentum.
In other worse, choosing a growth strategy is imperative. Now is the time for important choices and dynamic decisions. If we are not organized and prepared, we will miss the opportunity.
Antonis Karakousis
