JORG ASMUSSEN, ECB
Speech by Jörg Asmussen, Member of the Executive Board of the ECB,
16th Economist roundtable with the Government of Greece,
“Transforming uncertainty into stability, wisdom and growth”,
16th Economist roundtable with the Government of Greece,
“Transforming uncertainty into stability, wisdom and growth”,
Athens, 2 July 2012
INTRODUCTION
Thank you very much for inviting me today to open this roundtable with the Government of Greece. The title of my intervention is “can we restore confidence in Europe”. The simple answer is “yes”, because we must, to put monetary union back on a sustainable track. The more complicated part is how to do it. In my view, it requires finding the right balance between national and European responsibilities. This has two key dimensions:
First, what can Greece itself do to restore confidence.
Second, what can the rest of the euro area do to restore confidence.
1. What Greece can do to restore confidence
Let me begin with Greece. Under the first adjustment programme it has made substantial progress in adjusting its economy. The fiscal deficit was reduced from 15.6% of GDP in 2009 to 9.1% in 2011. And very important reforms, such as the pension reform, have been implemented.
However, many other necessary reforms have not been followed through due to weak programme ownership. Moreover, policy implementation has virtually stalled over the last three months. So the first priority for the new Greek government has to be getting the programme back on track.
Some observers will ask why. They will say that the programme has failed. They will note that the Greek economy is not recovering as expected. They will point out that large parts of the Greek population reject the conditions of the programme as a ‘diktat’ from Brussels and other capitals.
So let me make clear upfront: the programme is the best option for Greece.
The difficulties that Greece is currently experiencing do not stem from the programme. They stem from many years of unsustainable economic policies and a reluctance to implement the necessary reforms. The programme is so comprehensive because the problems in Greece are so deep-rooted. With or without the programme, any Greek government would have to pursue a similar adjustment to bring the economy back on track and restore the confidence of financial markets.
