Un outil unique pour la crise grecque : un allègement complet de la dette

Unique remedy for Greek crisis: a complete debt relief

The world economic crisis Physician has been administering a painful but inefficient treatment to a desperate patient, Greece, while keeping his unique, well known and efficient treatment as last resort option. He will certainly use the complete debt cancellation in twenty years for the Greeks as he did a decade ago for the Poor Countries. We are witnessing since Greek crisis, a repetition of nation financial history as it happened in the eighties. The Euro Zone crisis, and in particular Greek crisis and its current treatment strangely look like the economic crisis of the Franc Zone in the early eighties; both crises handled by the same practitioner: the IMF. For practical purpose, let consider one member of each zone: Greece and Côte d’Ivoire.

Let me recall some facts. In the early 1970s, as Greece in 2000s, Côte d’Ivoire over borrowed to finance its Import Substitution. In 1980s, this attempt failed and left the country with a huge outstanding debt. Likewise, the other members of the zone were heavily indebted and in payment cessation. As with the Greeks, the IMF (international Monetary Fund) tried to regain creditors trust by putting the indebted countries, including Côte d’Ivoire, under a tight Structural Adjustment Program (SAP) along with debt restructuration. As Greek program, it aims at liberalization, privatization and stabilization (the most prestigious word of the Practitioner!). As usual, it is a rush of reforms in every economic sector instead of a comprehensive plan to tackle the binding constraint of the patient. This race for competitiveness led the Cameroonian government to halve public wages rate. Similar tight and painful measures have been taken to repay the debt and improve the competitiveness. After ten years of SAP, marked by several social disruptions, prolonged economic recession and unmet economic targets, IMF acknowledged its first treatment failure and prescribed a more painful. In 1994, the IMF supported a devaluation backed by Structural Adjustment Program and further debt restructuration. While the devaluation reduced the nominal exchange rate, it did not sufficiently change the relative price of tradable and non-tradable goods even for one of most competitive of the monetary union, Côte d’Ivoire. Ten years after the devaluation, all the CFAF countries remained heavily indebted and not competitive as expected by the IMF. Finally, in 1996, the international financial community agreed to use the unique and truly efficient treatment to debt crisis: the complete debt cancellation called the Heavily Indebted Countries Initiative. These twenty years of painful treatment should have told to other nations that overborrowing is bad!

Greece has failed to draw the lesson of this story; neither did the IMF and its fox! They did not learn that Structural Adjustment, debt restructuration and even devaluation cannot solve the Greece’s case as it is in a worse position than countries like Côte d’Ivoire. In fact, the current economic indicators of Greece are below Côte d’Ivoire ones when it reached the completion point of the HIPC (June 2012). First, Côte d’Ivoire is one most competitive countries of the CFA zone while Greek competitiveness is below the average (25%). Before the debt cancellation, the Ivorian debt was approximately 60% of GDP while Greece one is above 125% of GDP. The debt

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