From Mr Olof Sjöström.
Sir, The article “IMF takes tougher stance over level of Greece’s debt” (January 26) highlights how the International Monetary Fund had already stated in September 2010 how serious the economic situation was in Greece by saying in a report that a 50 per cent write-down in Greek debt would only reduce by one-fifth the fiscal tightening required to reach sustainability. In 2012 the situation is even worse
Two weeks ago the German economist Daniel Gros stated at a meeting with the Harvard Club in Athens that after the fiscal tightening of the past two years the Greek people still only pay for 80 per cent of their standard of living. The remaining 20 per cent has to be financed through loans. As there are no savings left in Greece the money has to come from abroad. His obvious conclusion was that it will not take many days before there is no more additional money to be borrowed by the Greek people.
The conclusion must be that regardless of the size of the write-down of the Greek debt, 50 per cent, 70 per cent or 100 per cent, it doesn’t matter much as it anyhow will not lead to the necessary sustainability of the economy and the stop to additional borrowing from abroad. The key issues, and where the efforts today have to be concentrated, are the creation of a tax collection system that works, the opening up of the economy for free competition and the extinction of corruption from the highest to the lowest levels of the society.
The Greek parliament has over the past two years taken a number of good decisions in these respects. However, these decisions have simply not been implemented, due to a non-functional civil administration. One reason for this is the widespread corruption. Another is that the right people are in the wrong places from this point of view.
Greece is full of competent people. They have to be helped to come into power.
Olof Sjöström, Consul General, Stockholm, Sweden
