What are the main causes for an inflation rate that is higher compared to what was expected?
It’s true that inflation has been higher than originally expected—and we have revised our estimate for 2010 to 4-3/4 percent. We underestimated the consequences of the higher indirect taxes that were front-loaded at the beginning of the program. However, we do not see signs of second-round effects or of an inflationary spiral. The true meaning of “inflation” is that there is a longer-term trend to increase prices—and again, we do not see that. What we do see—and what the increase in inflation shows us–is that there is not enough competition in the Greek economy since taxes are fully incorporated into final prices. You are pressing for the shut-down of some state-controlled organizations and for the rationalization of others. Let me be clear on this point: we are not pressing for the shut-down of any state-controlled organization. We are talking about reforms. Two major ones are coming in the areas of energy and transportation. These are significant reforms and we are discussing variou
