OECD's periodic review of Greece's economy. This 2009 edition examines how well Greece is weathering the economic crisis. It also looks at how to bring Greece's public finances on to a sustainable path, how to improve the performance of the public health care system, and how to raise education outcomes. Greece has weathered the economic crisis relatively well, but putting public financing on a sustainable path will require strengthening tax administration and tighter expenditure management. Greek health outcomes compare favourably with the OECD average but the system is seen as not working well by the population. Greece's educational indicators lag behind those of other OECD countries and OECD makes wide-ranging recommendations in this report.Click to Access:
- 31 July 2009
Enhancing fiscal viability
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Putting public finances on a sound footing is a major policy challenge for Greece. The high public debt, at about 100% of GDP, and repeated fiscal slippages limit the room for counter-cyclical fiscal policy and a large pension burden is bearing on longer term fiscal sustainability. These factors have been reflected in a rise in sovereign interest rate spreads vis-à-vis Germany. Credible fiscal consolidation should focus on both revenue-enhancing and expenditure-containing measures. Tax collection is low in terms of GDP, pointing to considerable scope for raising revenue by fighting tax evasion and eliminating many distortionary tax exemptions. This calls for strengthening tax administration. To deal with frequent spending overruns, expenditure management should be improved through the timely implementation of the ongoing reform of the budgetary process and the rapid introduction of a more modern and transparent public accounting system. Reforms are also needed to rationalize public wage policies to contain the growth of comparatively large personnel outlays. There is also room to improve efficiency in public administration, and to reduce subsidies to public enterprises and other government entities. Additional reforms are also needed in the pension system, which is one of the most generous in Europe, and health care (Chapter 3) to ensure longer term fiscal sustainability.
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