Middle-east Arab News Opinion | Asharq Al-awsat

Greece’s Economy amid International Pressures, Popular Anger | ASHARQ AL-AWSAT English Archive 2005 -2017
Select Page
Media ID: 55358742

THE PEOPLE: A rally outside parliament in Athens in June called
for the Greek government to agree a deal with its creditors.
REUTERS/Yannis Behrakis

Cairo- The Athens government has adopted tough austerity policies for years, committing to conditions imposed by the “Troika”: European Union (EU), European Commission, and the International Monetary Fund (IMF), in order to receive the needed funds to resolve its economic crisis. However, Athens has started to reject the adoption of additional policies, which will increase levels of social struggle amid the rise of unemployment and the drop in living standards.

The IMF and the EU haven’t reached an agreement concerning the harshness of reform procedures that should be adopted by Greece to complete the third phase of the new rescue plan. Nikos Voutsis, the president of the Hellenic Parliament, said that the reform program adopted by his country rules out measures of “radical austerity” to avoid escalating the tension in the country.

Voutsis added that Greece has chosen the right path to reform its financial resources and he hopes that they will contribute to easing hard circumstances and burdens that face the Greek citizens.

In July 2015, Greece agreed on a European rescue plan that’s worth EUR86 billion (USD94 billion) over three years to avoid the separation from the Euro Zone, but the plan came out with difficult conditions.

According to the bailout agreement’s condition set in the past year, Greece was supposed to implement reform measures that result in a primary surplus of 5.3% of the economic product by 2018.

Disagreements of Troika

Greek Prime Minister Alexis Tsipras has considered that disagreements between the IMF and the EU concerning solutions of debt crisis have damaged the country and have delayed the return of markets and investors confidence.

The IMF hasn’t decided yet whether it will contribute to the third international rescue bundle inked in 2015. The Greek Minister of Labor, Georgios Katrougalos, said his country will notify creditors that it will not implement the reforms of the labor market imposed by the IMF; according to Reuters, the left-winged government considers that the Fund’s request represents a ban on laborers from the right of social negotiation on their wages and work conditions.

Collective Negotiation

Hours before talks with EU and IMF mission chiefs, Katrougalos said that Athens may fight for the right of social negotiation and described the IMF as a “strict player”.

The EU and IMF have considered that the non-flexible labor forces are a major reason behind weakening Greece’s competitiveness; but the Greek Minister of Labor revealed that some patrons have rejected the reform measures.

The left-winged government in Athens is supposed to provide a new reform plan in order to receive new loans by the end of September. However, the IMF has asserted that it will not participate in any rescue plan if the Europeans didn’t reach an agreement to reduce the debt burden in this country.

Tough Measures

People owning private businesses in Greece are expected to face harder fiscal commitments in 2016-2017; people are supposed to pay 75% of their taxes during 2016 based on their profits back in 2015, even if they didn’t make remarkable profits during this year; during 2017, the rate of taxes that should be paid will reach 100%, according to a governmental program that complies to to the conditions of a third rescue plan.

Around 15,000 protesters participated in manifestations against the government before an anticipated visit of inspectors, assigned by the left-winged government.

Data have showed that Greece’s economy has suffered from 0.9% deflation during Q2 amid pessimistic expectations of economic experts for the rest of 2016.