Tuesday, July 21, 2015

IMF Brings in New Enforcer to Deal With Greece

The International Monetary Fund is set to replace Rishi Goyal, head representative of the institution’s technical team in Greece.

The Greek newspaper Kathimerini reports that Delia Velculescu will now be the one assessing Greece’s financial affairs on the IMF’s behalf.

Velculescu had been the IMF’s head representative in the Troika that negotiated Cyprus’ bailout deal in 2013. Here she is discussing Cyprus during the crisis in that country.

In a 2009 paper on Greece, she actually made some suggestions that make sense:
achieve wage moderation, including through limiting the growth of minimum wages, in
the context of a coordinated agreement from social partners that creates sufficient
“buy-in” by the different vested interests;

• equalize at a lower level employment protection for both permanent and temporary
contracts, by streamlining layoff rules, relaxing hiring procedures, lowering firing
costs, and allowing for more flexible hours to facilitate higher employment rates for
females, youth, and the elderly;
 reduce administrative burdens and simplify rules and procedures for new businesses;
• reduce barriers to entry, especially in the service sector (this has been shown to be
associated with increased female employment) , including by fully implementing the
EU Services Directive;
• privatize state-owned enterprises;
• deregulate and restructure transport, telecommunication, and utilities, including by
unbundling operations (generation, transmission, and distribution) of electricity and
reducing price restrictions and barriers to entry in the road freight sector
reduce the government’s wage bill using public wage freezes/cuts and reductions in
civil service (for example by winding down public entities created for specific
purposes, such as those overseeing particular projects/reforms);
• reduce the tax wedge by lowering labor taxes and social security contribution rates,
especially for low-income workers and reduce the “marriage penalty” to foster female
employment (tax cuts should only be adopted in conjunction with lowering wages in
the private sector and reductions in the government’s wage bill

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