Greek PM George Papandreou has been on something of a PR blitz lately, arguing to anyone who will listen that his reforms are going well, and that the country won’t go bankrupt or restructure its debt.
(Ignore the worse-than-expected GDP contraction, and ongoing austerity riots, please.)
But it turns out that Greece can’t cut its way to the promised land.
Papandreou added that his administration had great hopes for its crackdown on tax evasion, even though it has fallen short of its target in revenue collection so far. “If Greece stamps out tax evasion, it will not need any new loans and will emerge much more quickly from the current crisis,” he said.
So the tax crackdown is falling short, and yet that’s what the whole reforms hinge on.
Cracking down on this stuff requires major cultural, institutional changes that can’t happen in the next few months.
Restructuring is coming.