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OECD Economic Surveys: Greece 2011

image of OECD Economic Surveys: Greece 2011

This 2011 edition of OECD's periodic survey of the Greek economy includes chapters covering fiscal sustainability, structural fiscal reforms, and labour and product market reforms.

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Sustainability cannot be achieved without structural fiscal reforms

The 2010 fiscal deficit was reduced mainly through across-the-board tax increases and cuts in civil service pay and pensions. Although these measures still have some role to play, for example in restraining public sector employment, social and equity considerations make their use more difficult going forward. Moreover, as is the case with higher tax rates, such measures cannot induce a lasting shift in government spending and revenue unless they are repeated frequently, which would be harmful for growth. Another drawback of these across-the-board measures is that they are of little use for enhancing the quality of public spending, which is also an important challenge for the authorities. The pursuit of fiscal consolidation must henceforth rely primarily on structural reforms to the public sector, such as those included in the government medium-term fiscal strategy. These are necessary to produce a high and sustainable primary fiscal surplus and to improve public service quality, which is indispensable for resolving the crisis and which will require considerable effort in a great many areas.

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