crisis

If the hundreds of thousands of entrepreneurs, small and big businesses alike, took as long to deal with their daily existential crises, every last one of them would have already gone bankrupt. At the same time, politicians don\'t have to worry about it.

Although Greece’s drama has left no people indifferent, neither those who stick to a tough position on Greece (Lithuanian government, for starters), nor newly declared Greece’s friends (European nationalists and socialists) would want the same scenario for their countries. However, becoming Greece is not so difficult. Here are a few guidelines.

The economic situation in Ukraine in 2015 and 2016 will depend on progress in externally supported reform program and on stabilization in the Eastern Ukraine. Fiscal consolidation, decline in real wages and unemployment will cause reduction of real private consumption. Weak hryvnia, despite dragging down consumption and investments, helps to increase fiscal revenues and narrow the current account deficit.

In March, Ukraine’s government adopted the Action plan for reforms in 2015 and 2016 while the IMF board approved four-year USD 17.5 bn extended arrangement under the Extended Fund Facility (EFF). The EFF supports ambitious program of Ukrainian authorities, which would in IMF words ‘put the economy on the path to recovery, restore external sustainability, strengthen public finances, and support economic growth by advancing structural and governance reforms, while protecting the most vulnerable’.

The look back at 2014 will include mainly good news. While comparing to traditional benchmark – the average performance of the European Union – the Czech GDP growth rate was significantly higher than the growth rate of the EU. The Czech economy has had a faster growth than the EU in five quarters in a row.

The new Greek government of the leftist party SYRIZA wanted to take back austerity reforms in order to, for example, “gradually restore salaries and pensions so as to increase consumption and demand”. But it seems that the only thing accepted by the European Commission and eurozone finance ministers is 4-month extension of the bailout in return for presenting a list of reforms that Greece had committed to undertake.

Nominants of Syriza haven’t even settled comfortably in their key chairs in the new Greek government yet and new prime minister together with finance minister have already made their first compromise and step back from their pre-electoral promises. They refrained form talking about the debt write-off, started talking about restructurization of debt and went on a European tour to find out from creditors which particular forms of restructurization could be acceptable.

We should open our minds to the notion of individual responsibility and entrepreneurship. We have to take responsibility and the costs of our mistakes. The recipe for growth is no technocratic engineering. Growth goes through entrepreneurship, mistakes, reactions to mistakes and risk-taking. These elements are critical.

Did we see only Pyrrhic victories or a real overturn in the crisis last year? Greeks remain the worst pupil in the class, Spaniards pretend that nothing bad is happening, Cyprus is not interested and French exodus continues.

On October 9, 2012 INESS with support of the Friedrich Naumann Foundation for Freedom and the National Union of Employers organized international conference under the title Cutting Deficits, which was a continuation of INESS’ annual traditional conference devoted to public finances. Two panels with seven speakers from four European countries took place in a Park Inn […]