Europe is at risk of wasting billions more on Greece and other countries if they don’t reform their economies to increase growth, according to Pimco’s Mohamed El-Erian.
“Further on, if this approach is kept up, more money will be wasted to save private creditors and the risk of a disorderly restructuring of the debt will be greater,” he said, according to Reuters.
El-Erian argues that, thus far, Europe has just been providing cash to fight the crisis. And, even with all the support in place, it’s failing to boost the region’s economies, and, instead, the economy situation has gotten worse.
There are some hints that Greece’s new unity government plans to put in place structural reforms that would reduce the importance of the public sector in the country’s employment structure. But in the short term, such cuts could be costly as the private sector doesn’t have the strength yet to pick up the pieces and hire those government workers who would lose their jobs.
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