Australian Economists Urge for Greek Debt Forgiveness

The political uncertainty that has spread over Greece will hopefully come to an end on Sunday, January 25 after the elections. According to the latest polls, the leftist party SYRIZA is in the lead and will likely have the largest percentage in the parliament.

Meanwhile, investors fear that the election results will lead to Greece’s exit from the Eurozone, since SYRIZA has promised to demand that at least half of the country’s debt is written off, and is not backing down.

Forty Australian economists wrote an open letter addressed to European authorities requesting a partial debt forgiveness for Greece. “I just don’t think that you can hope to continue to pursue austerity in the hope of solving that debt problem,” noted ANU economist and former Liberal leader John Hewson in an interview on ABC News Online. Furthermore, he added that the severe budget cuts have shrunk Greece’s economy and as a result the debt to GDP ratio has been stuck above 170% even after 5 years.

Another economist who signed the open letter, Dr. George Argyrous from the University of New South Wales noted that the austerity measures which aim to reduce Greece’s debt only hurt ordinary people. “Currently the pain is being concentrated almost squarely on the Greek population that wasn’t involved in any of those decisions around borrowing and how that borrowing was to be spent. So one aspect of what we’re proposing is that the burden needs to be shared more equitably,” he argued.

Furthermore, John Hewson stressed that even though Greece is in need of several drastic reforms, a partial debt forgiveness is also necessary, while he called out on Germany hypocrisy, given the country’s history. “Go back to 1953 for example, where the Germans had debt restructuring as an essential element of what was done in relation to Germany. I think something like 50 percent of the debt in that case was written off and the rest was extended to about a 30-year term.” he stated.