DEBT MANAGEMENT AND ECONOMIC SUSTAINABILITY (9)

From Ireland, Greece, United Kingdom, France to  Netherlands one thing is clear and that is the determination of the European citizens to resist their Government’s approach to adopting austerity measures that is impeding the growth prospects of the Eurozone economy.

What has Austerity brought to Europe? Budget cuts, Hardship, depression  for pensioners, tensions and strikes, uncertainty over the future of the Euro ‘Integration’, Socio-Political Crisis, Ideological Imbalance, Concern of Increase Unemployment which in Europe is pegged at 10.9% the highest since the formation of the euro, and challenged the integrity of the European leaders.

Spain is experiencing one of its worst economic crisis since 1992 as the Marian Rajoy Administration is facing a great challenge with its banking sector plunged in serious crisis which will require the use of taxpayers money to bailout the Banks.

United Kingdom was on the news again last week moving from its banking crisis which the Bank of England Governor Mervyn King should have curtailed with the information and warning he had at his disposal to another round of public sector strike, which has become a trend in the Cameron administration.

Imagine  more than 20,000 Police Officers in the United Kingdom taking to the streets to protest Government Budget cuts, while Prison Officials abandoned their duty posts to stage a walkout  opposing government reforms that will see prison officials retiring at 68 years very Incredible!

After witnessing a terrible defeat at the Local 2012 elections the Liberal Democrats are considering pulling out of the Coalition Government, as they feel they have lost the confidence of the Citizens.

Despite the situation of the UK economy Prime Minister David Cameron is still bent on pushing the Austerity reforms because he believes it is the best for the political economy, despite the fierce resistance it is receiving.

Nicholas Sarkozy lost his Presidency to Mr Francoise Hollande because of pushing the ‘Austerity’ pill, the Current Greek Coalition Government may lose the upcoming elections because of the ‘Austerity’ pill, which is now becoming a ‘dangerous’ pill for solving the political-economic crisis in Europe.

Germany has already warned Greece that it will stop further aids and bailouts to Greece in the tune of 1billion Euros if the new Greek Government fails  to  accept the conditions  and agreements placed before it by the Eurozone Leaders.

There is a lot of Socio-Political uncertainty in Europe and this is also posing danger signals to the Global Economy. If  Greece refuses to accept  Italy, Portugal, and Spain  who are also on default will be adversely affected and lots of major European banks may collapse thereby creating another unprecedented recession.

Italian Prime Minister Mario Monti has warned of possible increase in VAT (Value Added Tax) for Italians as part of a possible 4.5billion euros cut in Public spending which is part of the ‘Austerity’ pill that could spark tensions in the former Roman empire.

The Challenge is that the poor management of debt profile in Europe is creating a chaotic situation for an Integration that was supposed to bolster a powerful continental  economic  front.

Chancellor Angela Merkel and her party had an unpleasant ordeal in last week’s local elections as her Christian Democratic Party  suffered heavy losses in Germany’s most populous State  North Rhine-Westphalia to the Greens Party.

This further strengthened the ‘Anti-austerity’ wave blowing in Europe as voters rejected the tight fiscal discipline and management tactics of Chancellor Angela Merkel on the Economy which is still  stabilized compared to the ‘PIIGS’ axis of debt-ridden Nations.

 

It has become so severe even in Portugal as the Government has decided to eliminate four public holidays to boost National Productivity and ruthlessly drive an economic recovery plan from its present debt debacle. Finance Minister Mr Vito Gasper asserted  that the Country must do everything possible to keep its public finance in order.

As the Battle between Austerity and Anti-Austerity measures ensues in Europe, Africa should be watching keenly and determining this time not to return back to debacle of the 70’s and 80’s, Finance Ministers should daily study the trends in Europe and America and model their various economies to be sustainable and not too overly dependent on the Developed Nations.

Economic growth is very important and we can see that Nations like Nigeria, Liberia, Mozambique are emerging as Fastest growing economies in the World, by International Financial Agency rating this must be sacrosant with an effective management of the Debt profile and proper diversification of the economy.

How Europe will come out of its present predicament is still  a serious puzzle? As Economic scholars like Proffessors  Paul Krugman, Nouriel Roubini, Joseph Stiglitz, and Jeffrey Sachs have stressed that it will be a difficult period for the region as it will  have to reform and match reforms with growth.