A Blueprint for Greece’s Recovery in a Consolidating Europe

Yanis VaroufakisMinister of FinanceHellenic Republic

7th May 2015

Source: European Commission (2014), IMF (2014).

IMF Baseline Scenario for the Evolution of Debt 2014 – 2019 (% of GDP) - Contribution by factor

Backward Induction

Dynamic inconsistency

Austerity vs nominal GDP Growth 2009 to 2014

Structural Deficit Reduction

Nominal GDP Reduction

Nominal GDP Increase

Wage decline vs Export Growth

Looking Forward - InvestmentPrivatisations – public equity stake

Development Bank (DevBank)to mobilise public assets DevBank collaborates with EIB , Juncker Plan etc

DevBank’s shares transferred to pension funds

Looking Forward – Private banks

• Identify the size/composition of NPLs at each bank.

• Establish the correct special purpose entity structure (BB)

• Swaps that un-clog the circuits of credit

Looking Forward – Real Economy

Looking Forward – Synergistic Reforms

Looking Forward – Democratic Governance Reforms

Elements of an AgreementImmediate reforms

• Fiscal plans and a sensible DSA• Privatisations focused on investment, gvt

equity• VAT reform• An IRS-like Tax and Customs Commission,

under the Parliament’s jurisdiction• Pension reform• Judicial, out-of-court workouts

Elements of an AgreementBeyond June

• Investment Package• Public Debt Management• Anti-Poverty Drive

THANK YOU