February 27, 2011
It was never likely that Greece would turn itself into the new Germany in three years. So it is proving, as Athens implements the fiscal adjustment programme agreed with the European Union and the International Monetary Fund as part of its €110bn rescue package. Greece is making progress: public sector wages have been tamed and deficits are being reined in. The country’s paymasters say they are prepared to disburse a further €15bn next month, having already paid out €38bn.
But Greece’s adjustment looks like the labours of Sisyphus. The more the government cuts to meet its objectives, the more those objectives prove elusive. Gross domestic product shrank 4.5 per cent in 2010, broadly as anticipated. But domestic demand was moribund, business confidence is on the floor, exports are weak and tax evasion remains rampant.
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