Greece has too much red tape to encourage business investment and the country's new coalition government should tackle the problem "immediately," Europe's regional policy commissioner said Friday.
Greece has too much red tape to encourage business investment and the country’s new coalition government should tackle the problem “immediately,” Europe’s regional policy commissioner said Friday.
Johannes Hahn called for the simplification of investment procedures, and a clarification of responsibilities within all levels of government.
“There must be a simplification, not only in terms of procedures, but also in terms of responsibilities within the ministries,” Hahn said. “From my perspective the biggest obstacle is, let me say, confusion of responsibilities, which by the way is one of the reasons why foreign investors hesitate. And I think this should be tackled by the new government immediately.”
Other bureaucratic obstacles to foreign investment include uncertainty over how to obtain permits, convoluted tax systems and the slow pace of court cases, which can often take years to be resolved.
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Since May 2010, Greece has been dependent on billions of euros in two international rescue loan packages from the International Monetary Fund and other European countries that use the euro, without which it would go bankrupt. In return, it has tried to reform its economy and imposed austerity measures, including cutting salaries and pensions and raising taxes.
But many of the promised reforms have fallen far behind, with Athens coming under criticism from its international creditors. Reforms were further delayed by a protracted political crisis that led to two national elections in the space of six weeks, preceded by several months of a shaky coalition government. Both elections in May and June left no party with enough votes to govern alone, leading to the formation of a three-party coalition government, which has pledged to try to renegotiate some of the terms of its bailout.
But its creditors have so far not appeared open to making many concessions, and have insisted instead that Greece must get the program back on track – something the government has promised to do.
“We can say that there are policy implementation delays in a number of areas and it is clear that the economy is going through another difficult period,” IMF spokesman Gerry Rice said in Washington Thursday, adding that “clearly the important thing is to put the program fully back on track.”
Debt inspectors from the IMF, European Central Bank and European Commission, collectively known as the troika, visited Athens for an initial post-election assessment last week, and are to return to Greece on July 24.
“The basis for discussions continues to be the objectives of the program that have been agreed with the Greek government,” Rice said. “On that basis, if there are ideas how to better achieve the key program objectives, we are open to discuss them, as is the case in any of the programs that we support.”
By the time the troika returns, the government hopes to have come up with (EURO)11.5 billion in savings for 2013-14 that are part of the country’s second bailout. Prime Minister Antonis Samaras is holding a series of meetings to look into cost-cutting measures.
The government has said it hopes to extend the time over which it must make its overall cuts – although it hasn’t made a formal request yet.