economists, has warned creditors that Greece might have to write off more than 30% of its loans.
The group presented its tenth report, ”Report on the European Economy”, on Tuesday in Brussels, stating that Greece may need another bailout by 2013 at the latest.
Greece is unlikely to be in a position to refinance itself via the financial markets once the current rescue package runs out in 2013, while the economists recommend drastic steps to prevent the EU from having to provide Greece with long-term aid.
Greece should either return to its national currency, the drachma, or launch even tougher austerity measures, including general cuts in wages and salaries, according to EEAG.
The chances of this Greece returning to market financing have certainly been reduced as a result of the large upward revisions of its budget deficit and debt for 2009, and the consequent upward drift of the corresponding figures for 2010, says the report.
EEAG suggests Greece to undergo a period of internal or external depreciation, which will lower the euro-value of Greek wages, prices and GDP.
Finally, tax evasion should be the top priority of Greek policymakers, according to economists.
“Tax evasion is responsible not only for the Greek budget deficits, but it results in a misallocation of resources away from production of traded goods that the country must reverse if it is to improve its trade balance”, EEAG commented.
source: CAPITAL
