Greece must accelerate reforms: ECB economist
The European Central Bank's chief economist said on Sunday that Greece needed to press on with difficult structural reforms if it is to overcome the debt crisis plaguing the nation.world Updated: Dec 12, 2010 20:54 IST
The European Central Bank's chief economist said on Sunday that Greece needed to press on with difficult structural reforms if it is to overcome the debt crisis plaguing the nation.
"The programme remains broadly on track... But Greece needs to continue structural reforms to lay a sound basis for growth and job creation," Juergen Stark said in an interview with Greek daily To Vima.
"It is not a 100-metre sprint, it is a marathon, and Greece has just started with this process," he said.
"What is important now is that some delays in the preparation of important structural reforms, particularly in the second wave of labour market reforms, urgently have to be addressed," he said.
Greece has committed itself to drastic reforms and cutbacks in its overblown state sector in return for a 110-billion-euro (148-billion-dollar) EU-IMF loan that saved it from bankruptcy earlier this year.
In late November, Athens won approval for a new slice of rescue funding but the IMF and EU prescribed even tougher action on tax evasion, waste in health care and on state companies to merit another payout.
"Structural reforms are needed to secure competitiveness and to reinvigorate output and employment growth," said Stark.
Meanwhile, Stark rejected the prospect of eurobonds, a common bond that would enable eurozone countries to pool their borrowing capacity.
The idea was proposed earlier this week by Jean-Claude Juncker, the head of the Eurogroup of eurozone finance ministers, and Italian Finance Minister Giulio Tremonti, but swiftly rejected by France and Germany.
"Some countries would benefit from a Eurobond because they would pay lower interest rates, but other countries would not benefit because they would have to pay higher interest rates," said Stark.
"Artificially lowering the interest rate would create a disincentive for the governments concerned and should therefore be avoided. Eurobonds would not solve the structural problems that some countries are facing," he said.
Stark also issued a warning for eurozone members to enhance economic governance.
"We (the ECB) have the clear mandate to maintain price stability. To ask for other objectives would overburden the ECB," Stark said.
"We are not in charge of fiscal policy. Our mandate is not to make it easier for governments to refinance their debt," he said.