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Friday, 22 October 2010

Live blogging the LSE Hellenic Observatory Fiscal Policy Conference

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Owsiak: change in public debt in Poland unrelated to GDP growth. This is meant to be Laffer-bashing. 75% of Polish state spending is non-discretionary, cannot be cut or re-allocated.

Options? Must review social model. What will be provided by the state? This must be resolved through a Swedish-type social pact. Tax must be reviewed, seen as an investment.

Sure Prof. I'll see tax as an investment when it finances investment. Right now it finances consumption - read your own slides.

Two conditions for social pact: One transparency. Who pays what, for what. And two: imrpoved management: how many civil servants?

Greece's problem also a problem for Poland. Society never knows what public finances really look like.

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Prof. Owsiak of the U. Cracow correctly notes an irrational approach to public finances, but says soaring budget deficits due to 'neoliberal' approach to tax as barrier to growth, tax competition by new member states, tolerance of tax avoidance.

Owsiak: time to concentrate on revenue side. Laffer curve does not work.

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Back from coffee break: FONDAFIP speaker comments that France is a public spending champion among the EU or OECD nation.

Reformed public finance in 2001, implemented in 2006, including a new 'peformance-centred' rationaly.

FR tries to deliver maximum spending forecasts, has a new comprehensive review cycle and a new 'multi-year planning law'.

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Q&A

On role of external auditors, independence of government audit office: there are provisions in the law and efforts to establish a system of internal audit in finmin plus a new directorate to deal with GAO auditing. Gosh sounds pointless.

On moral hazard and government incentives in a world of easy debt and EU money and how to not return to these: Big political obstacles and vague gestures. Tax admin needs to be more autonomous from politicians, departure from partisanship. Some posts are goldmines, people lobby and fight for these.

On bank of Greece monitoring and why no one listened: Question dismissed with shared snickers with Christodoulakis about how the BoG wants to make recommendations to everyone but never wants to reform itself, like all central banks. Answer the question man.

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Rapanos: Greek tax offices extremely numerous by oecd standards for clientelist reasons. Tax officers have enormous discretion and can only be transferred with the minister's personal approval. A dd to this frequent tax amnesties destroying credibility and huge backlog of 150,000 tax court cases pending, no dispute reoslution mechanism - a recipe for corruption.

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Greek budget has 14,000 items - 6,000 to 7,000 transfers between them annually, each requiring approval.

LOL
- but new law will ban transfers and give more power of control to parliament.

Still now explicit national fiscal rules and lack of commitment, no external auditors (expect hospitals and municipalities I think)

Accrual accounting only on the revenue side.

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Rapanos - too much opacity. None or rudimental budgeting in General Gov't despite huge amount of money. Parliament is a rubber-stamp mechanism. The executive has all power on fiscal policy.

Greece needs huge improvement to institution and ex-post auditing, not just on a legalistic basis (e.g. 'Is money spent according to law?' Is pointless. Is it spent correctly and as budgeted?)

Also a need for efficiency measures beyond eu-funded projects.

Finmin control - too little accountability elsewhere. (See earlier note on new budget law)

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Rapanos - Greece GDP forecasts optimistic (plus 0.35 percentage points). OECD and EU also over-optimistic.

Even conservatives like the IMF used rosy projections for our fiscal measures.

Sounds like yomamanomocs but he has a point. Everyone was asleep at the wheel.

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Rapanos: takes 3 years for preliminary budgeted deficit estimates to be evaluated. Deviations are substantial - targets never met. We're getting revenues wrong consistently since Euro accession, revising downwards.

And that's just Central Gov't - none on local Gov't

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Rapanos: Greece missing numerical fiscal rules,independent fiscl councils, medium-term budget framework, budgetary procedures

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Rapanos is on now - the Chair of NBG. Says commentators misunderstand the Greek fiscal institutionl framework - which is a) crucial and b) missing.

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Christodoulakis hails Greece's latest bond issue. Ooh. We're getting cocky.


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Greek finmin has sent ms Drosou, hardly an operator. She rolls out the usual blurb and celebrates the new Organic Budget law requiring Greek ministries to have a CFO and take responsibility for their own budgets. Wow.

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FONDAFIP: EU "a common house in which we can survive difficult times"


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Objective is not to instruct one wayward member but to "learn from one another" - we're all bankrupt anyway!

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Prof. Featherstone touches on the CSR in the UK, remembers to moan about the cut to Higher Education budget.

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And we're off. Prof. Featherstone looks more like a Greek academic than I though - bit of a jowl, tweed, hideous yellow tie.


Prof. Bouvier can't make it but his wife will stand in. Great start to conference on sound management.

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Journos seem to have had a late night - taking their time getting in. The blog's favourite Economist hack isn't here yet either, but is meant to be attending.

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Conference Programme available here: lse.ac.uk/collections/hellenicObservatory/pdf/Events/CONFERENCE%20-%20Public%20Financial%20Management%20(22.10.2010)/Programme_for_website.pdf

Looking forward to ex-finmin N. Christodoulakis' contributions. He looks like a nice guy up close, and suitably low-key.

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Tune in later today for highlights of the event as they take place. I predict many LOLs.

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