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  • The Greek economy has entered a critical phase; deterioration of euro area growth prospects enlarges risks for the domestic economic outlook
  • Domestic economic policy should advance quickly on three fronts:
  • First, for public debt dynamics to revert to a sustainable path, the ongoing PSI negotiations must lead to an agreement in the very short term, before business cycle conditions deteriorate significantly in the euro area
  • Second, positively surprise markets through (a) improved tax collection and more concrete results in the fight against tax evasion and (b) containment of public expenditure and increased efficiency of public administration via the closure or merger of unproductive state entities
  • Third, quick implementation of a critical mass of privatizations and structural reforms, that can assist to jumpstart economic growth