Stiglitz voices concern about Greek bailout
Nobel laureate economist Joseph Stiglitz on Tuesday voiced concern about the terms of the Greek bailout with Athens facing severe fiscal austerity measures in a bid to slice its debt.
"It is good that Europe finally got its act together and was able to come up with a package" to save Greece, Stiglitz, who won the Nobel Prize for economics in 2001, said in an interview with BBC radio.
But the one-time economic adviser to former US president Bill Clinton voiced concern about the "degree of fiscal austerity" being placed on Greece.
"If you cut budgets too excessively the economy gets weaker, tax revenues go down and the improvement in the fiscal position of the country is much less that one would have hoped.
"This is specially true because other countries in Europe will be going through similar exercises and the result of that is that the recovery of Europe, which is based on concerted government expansionary policy, will already be weaker," Stiglitz said.
Senior politicians from around Europe on Tuesday warned Greece that it must stick rigidly to its planned austerity programme or risk having loans withdrawn, pushing it back to the brink of bankruptcy.
After a 110-billion-euro (145 billion-dollar) bailout deal struck by the 16 members of the eurozone and the International Monetary Fund to ease the Greek crisis, attention turned to implementing the programme and protests against it.
The finance minister of Germany, which is stumping up the lion's share of the eurozone contribution, warned that the cash was contingent on Athens sticking to its part of the bargain and enacting harsh wage cuts and tax hikes.
© 2010 AFP