Posted on 06/30/2015 11:12:16 AM PDT by Citizen Zed
Decisions made regarding Greece over the next few weeks will determine whether Greece will enter what Mario Draghi has called an “unchartered territory.” While Greece’s finances continue to receive considerable attention, the country has made several attempts at reform to varying degrees of success. One area in which Greece has made significant progress is improving its business climate.
Since 2010, Greece’s reforms have included:
- Reducing its government deficit by reducing its public sector (via laying off public employees and cutting government spending) and increasing taxes
- Reforming the labor market
- Reducing wages to make the country more competitive
These measures have been very unpopular, causing dissatisfaction among the people in Greece and resulting in a new political landscape in the country.
However, other structural reforms have been aimed at increasing the medium-term prospects of growth in Greece, and these reforms have resulted in significant advances in terms of improving the business climate. One way to assess the success of these measures is to look at the Doing Business indicators of the World Bank.
Greece ranked No. 61 out of the 189 countries ranked by the World Bank in 2015. However, Greece has improved its position significantly. The Doing Business 2010 report had Greece ranked No. 109 out of 183 countries for ease of doing business.5 Greece advanced four positions last year alone. According to the 2015 report, the biggest improvements between 2014 and 2015 have been on:
- Starting a new business: The number of days needed to open a business today in Greece is one-third of what it was 10 years ago, and the cost as a percentage of income per capita has gone from 32.5 percent to 2.2 percent.
- Registering property: Greece reduced the property transfer tax and removed the requirement for the municipal tax clearance certificate, making property transfer easier.
- Trading across borders: Greece has introduced electronic submission of custom declarations for exports that facilitates trade.
The areas in which Greece’s position has fallen relative to other countries are:
- Getting credit: Greece still scores lower than many countries in legal rights for borrowers and lenders.
- Paying taxes: Greece increased the corporate income tax rate.
These areas were also reflected in the opinions of business leaders, as captured in the Global Competitiveness Report of 2013-14. This report said aspects that still generate a bad climate for doing business in Greece include tax rules and regulations, policy instability, and limited access to financing.
Reforms in these areas are important and still remain a challenge for Greece. Should these reforms occur, they might help promote growth in the medium term and help the country increase income via investment and exports, which could potentially facilitate debt repayment.
And I have a gently used bridge in Brooklyn to sell to you.
The pathetic thing is that the Fed tries to convince us that ITS solvency and balanced sheets are above board.......
Those who don’t get their money outta that country had better be ready to take one between the cheeks.
Yeah, sure it has...
Yeah, sure it has...
I thought the Hump Day jokes were for tomorrow. What’s going on?
Well. I hear they are very heavily invested in the drachma......(EUROS? What are they?)....hahahahaha....
Free money has that effect.....temporarily.
Improving? The government is about to confiscate money in bank accounts, go off the Euro and devalue the currency by 1,000% and the business climate is improving? Ana needs to lay off the booze before she writes these columns.
Heck, if they can force they bankers to run for the hills, it will be worth a little sacrifice!
A 25% decrease in GDP is progress according to the Fed, GREEN SHOOTS!
Greece, Spain and Portugal all have the same problem.
Lots of people hanging out at the local cafe, doing nothing and living off the State.
I don’t see that changing anytime soon.
Greece could use a good dose of Reaganomics. First ditch the EU bureaucracy and business strangling regulations. Second, cut and simplify the tax structure with a simple flat tax. Lastly get rid of all the government programs that suck the life out of the economy. The drachma could become the strongest currency in Europe backed by a soaring economy.
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