Austerity easier said than done | business | Hindustan Times
Today in New Delhi, India
Sep 22, 2017-Friday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Austerity easier said than done

Europe's plans to help Greece avoid piling up another mountain of debt are straightforward enough on paper: Get the government to cut its spending, mainly by trimming the large public sector, and increase its revenue, mainly by collecting the taxes it already has in place.

business Updated: Oct 11, 2011 21:23 IST
Michael Birnbaum

Europe's plans to help Greece avoid piling up another mountain of debt are straightforward enough on paper: Get the government to cut its spending, mainly by trimming the large public sector, and increase its revenue, mainly by collecting the taxes it already has in place.


In practice, those goals require a fundamental overhaul of the Greek system. Plans to raise money by selling off state property have collided with a new tax on land that makes investors less interested in buying it. Efforts to curb rampant tax evasion are hampered by deep pay cuts for tax collectors. In the meantime, the country is close to running out of money.

Europe is increasingly inclined to give up on much of Greece's debt, which would relieve the pressure to reform but would have uncertain consequences for all the European economies.

German Chancellor Angela Merkel and French President Nicolas Sarkozy announced this week that they would support a plan to shore up banks to guard against a major financial crisis, as well as fundamental changes to the way the European economy is run.

Ordinary Greeks, meanwhile, feel that neither their leaders nor Europe's are up to the challenge.

(In an exclusive partnership with The Washington Post. For more log on to www.washingtonpost.com)