35. Policy and Institutional Change in Southern Europe

Voices are mounting in the South of Europe that servicing the public debt is unsustainable and to avoid the “counter-productive” austerity measures it is necessary to have another generous haircut accompanied with rescheduling of interest payments. The concern of the ECB and the IMF is that extensions of this sort implied by rescheduling will be used exclusively to avoid cutting expenditures and sustaining various inefficiencies in the public sector and, primarily, in rationalizing the tax revenue collection system. The concern of Southern governments and Greece in particular, is that the austerity measures reinforce the deep recession (of the order of negative 7–5 % growth rates according to various forecasts).