The prime minister’s announcements at the Thessaloniki International Fair (TIF) regarding his tax cut plan and investment-friendly measures, in contrast to Alexis Tsipras’ policies, to some extent confirm his electoral pledge to introduce a new brand of politics and a fast-track economic recovery that will lead to a definitive exit from the crisis.
The policies that were announced stir optimism and cultivate expectations of improved economic conditions.
Yet, these measures do not suffice to reverse the damage done by the decade-long crisis nor can they remedy the dysfunctions that have developed in the economy.
One simply does not have the funds and the fiscal and other tools required to remedy the accumulated economic problems in one fell swoop.
This will require time and effective policies that create better conditions.
The first challenge is to address the problem of Greek banks.
Without a rapid cleanup of the banking system and the resolution of non-performing loans (NPLs) banks cannot perform their role in the economy and the private sector will continue to lack funding.
Everyone is aware of the magnitude of the problem.
At the moment there are preparations underway in cooperation with European authorities to create a mechanism for the guarantee of securitised bank loans in order to facilitate their sale and to dramatically reduce the volume of NPLs.
That would expedite the recovery of banks and free up money so as to restore conditions that can ensure effective funding of the economy.
Sources say the process is moving forward as it is facilitated by a drop in interest rates globally and that one may soon see results if all parties agree and there are no complications.
There is no room now for disagreements and shilly-shallying.
Only a viable solution that applies to all banks can ensure an effective restructuring of the crucial banking sector.
Otherwise more time will be wasted with the usual reservations and postponements which will undermine the optimism created by the government’s programme.
