OECD Sees Higher Greek Euro Withdrawal Risk
First Published Sunday, 13th May 2012 11:16 pm - © 2012 Dow Jones
MILAN -- The chief economist of the OECD sees the risk of Greece abandoning the euro greater than it was at the beginning of the year, according to an Italian newspaper report Sunday.
"The danger exists, and today it is greater than it was six months ago," Pier Carlo Padoan of the Organization for Economic Cooperation and Development is quoted as saying in an interview published in La Stampa.
Padoan, who is also deputy secretary-general of the Paris-based organization, said Greece must go ahead and implement its austerity measures and fight tax evasion when it finally overcomes the political stalemate among its parties after the recent elections.
He also said a Greek default on its debt would be nothing less than a social catastrophe.
The country's political parties failed Sunday to bridge their differences in a final effort to form a coalition government, raising expectations that new elections are inevitable.
Padoan said he favors excluding public investment from the calculation of budget deficits even though he prefers to have member countries of the euro zone respect the "fiscal compact" on maintaining discipline over their public finances.
He also supports the idea of allowing member countries to issue euro bonds to help finance growth, an idea championed by Italian Prime Minister Mario Monti.