Greece's cabinet started to put together yesterday the final touches to the government's economic policy, expected to be presented next month, in a plan that will aim at improving the efficiency of state-controlled businesses.

Prime Minister Costas Karamanlis, Finance Minister Giorgos Alogoskoufis and Development Minister Dimitris Sioufas met yesterday to determine how the conservative government will present to the business community at the Thessaloniki International Fair (TIF) in September its policy on maintaining a healthy, growing economy.

According to sources, the plan will aim primarily at stamping out Greece's booming tax-free underground economy and boosting the competitiveness of state companies.

The government is eager to duplicate the success of recent changes at telecom giant OTE.

The state-controlled phone company has said that it will proceed with cutting its 18,000-member workforce by about a third in a bid to offset sliding revenues.

Market participants see the Public Power Corporation (PPC) next in line for widespread reforms aimed at lifting its appeal to the investment community - a necessary condition if the state is to achieve its ambitious privatization programs.

Among the other changes slated for state businesses is the introduction of more stringent measures concerning corporate governance. In addition, all state enterprises will soon be required to report their results according to International Accounting Standards.