OECD Calls For "Big Bang" Reform Of Greek Bureaucracy

DECEMBER 8, 2011 THE WALL STREET JOURNAL

LONDON (Dow Jones)--Comprehensive and urgent reform of the Greek government's central administration is needed if efforts to turn the country's economic fortunes around are to be successful, the Organization for Economic Cooperation and Development said Thursday.

In an unusually hard-hitting report, the OECD detailed the many deficiencies in the public administration that make it difficult to implement wider reforms to the public sector and the economy, and control spending.

It concluded that the coordination between ministries is almost non-existent, while the structure of the public administration encourages corruption. Basic record keeping is absent, while it has proven impossible to monitor expenditure, the OECD said.

The Paris-based think tank concluded that the public administration is so riddled with interconnected weaknesses that only a comprehensive reform can work.

"A 'big bang' approach is probably the only option," the OECD said. "It is only through a general restructuring of its administration that the government can create the scope to reallocate resources and modernize structures so that they are 'fit for purpose' to implement the reform agenda."

Greece's government has repeatedly failed to meet targets under its bailout agreement with the European Union and the International Monetary Fund. But rather than being the result of a lack of political will, the OECD report suggests that the government is simply unable to get anything done.

"Policy implementation, assessment and coordination account for a strikingly low share of the output of Greek ministries, which essentially consists in producing regulations," the OECD said.

A lack of information that would inform policy making and implementation is one of the key weaknesses highlighted by the OECD.

"The administration does not have the habit of keeping records, or the capacity to extract information from data, and generally of managing organizational knowledge," it said.

One consequence of this lack of basic information about how the administration works is that budget control is difficult.

"It is very hard to monitor and control expenditures," the OECD said. "The budget is fragmented and non-transparent, detailed and input-oriented. There has been practically no use of output information and performance information in the budget process."

A core source of many of the weaknesses in the public administration is what the OECD calls "legal formalism," which leads to systems that are "both very detailed and very inflexible."

Overall, the system generates "the conditions for corruption and facilitate inappropriate individual behaviors, rent seeking and clientelism," the OECD said.

by Paul Hannon, Dow Jones Newswires; +44 20 7842 9491; paul.hannon@dowjones.com