Greece is committed to transparent, rules-based economic system

From Mr George Papaconstantinou.

Sir, The headline to Wolfgang Münchau’s article of November 30 notes: “Greece can expect no gifts from Europe”. Indeed we expect no gifts. We are committed to restoring credibility in fiscal management and promoting the creation of a transparent and rules-based economic environment conducive to growth and economic development.

We do however have a difficult starting point. The new Greek government has found public finances in a very bad state and has had to take measures swiftly in order to restore stability. On the fiscal side the draft 2010 budget will bring the deficit to 9.1 per cent of gross domestic product, down from 12.7 per cent for 2009, with half of this correction based on permanent measures. The 2010 budget is indicative of our commitment to reduce waste and shift resources to growth-enhancing expenditures. To this end it includes: a first-ever reduction in primary expenditures in absolute terms; a 25 per cent reduction in government consumption expenditures; a cut in short-term government contracts; a civil service hiring freeze in 2010, and a phased reduction after that, with only one new public servant hired for every five who retire. Within the deficit reduction target, expenditures have been reallocated towards growth and productivity-enhancing areas, as well as targeted support to those hurt most by the recession.

We are committed to restoring credibility in our statistics and will legislate to render the National Statistics Service independent of any political interference. By the end of 2009 a report from an independent commission will provide recommendations on putting Greece's budget planning on a multi-year horizon and, for the first time, linking funding to specific goals and results. Public consultations on pension reform have already begun. By April 2010 we intend to put forward changes that will address the long-term sustainability of the pension system and public finances. Furthermore an overhaul of the tax system is already under way. Legislation to be submitted to parliament in March will lead to a significant broadening of the tax base, while simultaneously tackling Greece's widespread tax evasion.

While we are certainly bearing no gifts we are fully committed to consistently introducing and implementing the necessary steps to restore our credibility and finances. This will allow Greece to play its full role as a member of the European family.

George Papaconstantinou,
Minister of Finance, Greece