2008 – 2012 to 20. 1 %. this percentage will be bigger for 2008 – 2013, as the recession is expected to continue, albeit at a slower pace. the recession led to a dramatic decline in employment and pushed the unemployment rate up to a historically high annual average of 24. 5 % in 2012 ; a further rise is expected in 2013. this crisis, unprecedented in magnitude and duration, has multiple adverse effects as it : • reduces per capita income and living standards ; • leads physical and human capital to become obsolete ; • causes savings and banks ’ deposit base to shrink, thereby leading to liquidity constraints ; • feeds uncertainty and discourages investment ; • hampers fiscal consolidation, as lower incomes mean less revenue for government. this fuels a vicious circle of deficits and recession that leads to repeated revisions of deficit and debt targets, undermining the credibility of the consolidation programme. the deeper - than - expected recession makes a faster pace of structural reforms imperative over the last few years, the recession has turned out to be deeper than initially forecast. the reasons behind this should be sought in the way the adjustment programme was implemented : in the wavering, the mistakes and omissions and, above all, the lag in implementing structural reforms. this lag prevented the contractionary effects of fiscal consolidation from being mitigated and hindered the return of confidence. the same reasons also explain the unfavourable financial conditions that prevail. by contrast, if the structural bis central bankers ’ speeches reforms envisaged in the programme had been implemented consistently and from the programme ’ s inception, their favourable effects would already have made themselves felt and would have reduced the duration and severity of the recession. on a positive note, the depth of the recession and its implications have, in fact, been taken into account as shown by the revisions to the programme : the implementation horizon, the cost of borrowing and the maturities of the loans provided to greece, the size of financial support and the measures to reduce the level of sovereign debt. in any event, the recession cannot be used as an excuse for not honouring the commitments made and, particularly, for any relaxation in the effort to promote the necessary reforms. if this were to happen, it would seriously undermine the gains in confidence that have come at the cost of painful sacrifices. 2013 will be a difficult year, but recovery will be visible in the course of 2014 as long as the prospect of an exit from the crisis is not clearly in sight

tradable goods and services. but if we are to succeed in transforming the economy, we must realise that the adjustment programme highlights only the minimum changes that need to be made. thus, in no way does the programme relieve us from our primary responsibility as a nation to implement a broader national action plan for growth, incorporating policies for the transition to a new model of sustainable growth. now that public finances are stabilising, it is essential that we proceed faster with fundamental reforms that will ensure : • an efficient public sector, both citizen - and business - friendly ; • modern infrastructure ; and • open, competitive markets. effective use of eu funds following the recent european council decision, the structural funds available to greece for 2014 – 2020 will total eur 18. 3 billion. these resources can play a decisive role in bringing the recovery forward and in implementing a long - term strategy for the transformation of the economy ’ s productive base. under current circumstances, eu resources could help to address serious gaps in the financing of new investment projects. so far, eu funds, despite their positive contribution, have not been used to maximum advantage. this is precisely why such resources will function at this time as powerful tools for growth, provided they are integrated into a broader national plan for growth. creating the conditions for lightening the tax burden of those who already pay taxes the central goals of the tax reform agenda should be to broaden the tax base and curb tax evasion. indeed, fiscal adjustment should focus, first, on cutting down those expenditure items that are not conducive to growth and increasing the return on other items of expenditure and, second, on modernising tax administration in order to effectively tackle tax evasion. action along these lines will create scope for reducing the heavy tax burden that has, increasingly in the last few years, been shouldered by those who already pay taxes. this will help foster a sense of equity in tax matters and will generate positive expectations that will partly offset the contractionary impact of spending cuts. the reform of the banking sector is key to restoring normal liquidity conditions since the onset of the crisis, greek banks have borne the brunt of the repeated downgrades of greek sovereign debt. they were cut off from international markets, while the prevailing uncertainty led to large deposit outflows and a loss of more than one third of the banks ’ deposit base in less than three years. the banking system ’ s funding constraints impaired its capacity to finance the real economy, causing problems for production