Greece has to face a double challenge: (1) to consolidate the country’s fiscal position through effective fiscal and structural policies aimed at reducing the budget deficit and lowering the public debt to GDP ratio; and (2) securing the conditions for economic development in the years to come.
The main objectives for Greece’s 2009-2013 Stability and Growth Pact are as follows:
· to consolidate the country’s fiscal position through effective fiscal and structural policies aimed at reducing the budget deficit and lowering the public debt to GDP ratio;
· to secure the conditions for economic development in the years to come through addressing long-standing structural weaknesses and thereby putting the economy on a new and sustainable growth path.
· to address the credibility deficit which the country’s economic policy currently faces. The recent large revisions in deficit figures, coupled with previous failed attempts at fiscal consolidation make it increasingly difficult for Greece to continue funding its public deficits and large stock of debt in international capital markets.
At the same time, Greece possesses multiple untapped comparative advantages for trade and investment. The country’s location makes it a natural hub for trade and investment in the wider regional market as well as for energy and transportation networks; it has a leadership position in global shipping; a rich potential in renewable energy resources; a unique natural and cultural environment which makes it one of the most attractive tourist destinations; and highly qualified human capital. These advantages have to be turned into development opportunities for sustainable growth and job creation. Thus, enhancing the country’s structural and price competitiveness becomes a co-objective to that of fiscal consolidation.
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