Greece on the run..by Ektoras

During the last year structural reforms have taken place in Greece. While these reforms are noteworthy, they have been little noted by markets and the political world in general. the country continues to undergo a painful adjustment and the challenges stemming from unfavourable debt dynamics and a debt overhang issue are still in place. Greece has to adopt significant structural reforms in order to keep existing!

Over the course of the last year, the Greek government, under the guidance and supervision of the so called "troika" introduced a set of large-scale reforms addressing structural issues that have encumbered the Greek economy for almost thirty years.

In less than a year, the Greek government has:
-completely reformed the pension system, raising the pension age to sustainable levels, cutting down on pension costs and separating pension from health care costs, and is set to bring to the parliament large-scale reforms to cut down on health care costs, including the mergers of hospitals and the electronic registry of prescribed medication.
-reformed labour markets allowing for more flexibility in the hiring/firing process and significantly reducing the power of the collective bargaining processes.
-started and will soon complete a full liberalization of product markets eliminating barriers to entry and minimum compensation laws for 150 professions.
-reformed and centralized prefectures, halving the size of local administration.
-announced large-scale restructuring of loss-making corporations, significant privatization plans and a shift toward more proactive use of public-sector assets.

The size and scale of reform over such a short period of time is noteworthy. Despite some popular dissent, the government still enjoys a comfortable (by Greek standards) majority in the parliament and remained the leading party in the recent local government elections in November.

The government seems determined to proceed with continued reforms in the year ahead. Specific items on their agenda are likely to be the increase in tax revenues through higher tax yield and the increase in efficiency/reduction of costs and size of the public sector.

The markets, by common sense, expect that there will be a shift in the economy’s overall structure, productivity and competitiveness in the years to come. the government's bet is the growth factor which need to turn positive in 2012-2013.

it is unfortunate that the markets seem to be skeptical and this may be noted on the Greek government debt spreads. hΔopefully in the years to come the -expected- positive outcome will push spreads down and will allow greece to reach the markets again.

the financial and economic reforms are a must. politically wise the problem is bilateral. on the on hand the government has not explained to the Greek people what it really aims and on the hand the opposition is sinking into populist speeches blaming the government for any measures that it takes.
worth noting though that theoretically the opposition is supposed to be a central right,liberal and market friendly party...as said..theoretically..