The IMF assumes that without fundamental financial and structural reforms of the Greek economy all the efforts to save it are doomed to fail. Without cardinal changes there cannot be any significant reduction of the Greek budget deficit.
At the moment the situation looks not so optimistic. The final value of Greek GDP is expected to be 1% worse than the one given in the preliminary forecast. However, there is good news as well: The competitive ability of the Greek economy starts growing.
In May 2010 Greece received financial aid to the sum of 110B euro under tough austerity conditions, including the obligation to reduce the budget deficit to 3% of the national GDP.
A year later it became obvious that Greece wouldn’t be able to come up to the expectation. At the end of 2010 the deficit reached 11% of the GDP, which was worse than the most pessimistic forecasts.
During the latest summit of the EU finance ministers (held last week) the participants decided to postpone the repayment of the debt.
The question of debt restructuring wasn’t considered. They don’t exclude the possibility of partial restructuring. But in any case some preparatory steps will be needed.
So, the Greek question remains open.
The Department of Volume Analysis,
