ECONOMY

Euro seen as shield against geopolitical uncertainties

Greece yesterday gave the thumbs-up to the strong euro, saying that the single European currency has managed to absorb some of the impact of the current slew of geopolitical uncertainties. Unlike the discarded national currencies, the euro has proved to be an effective shock absorber to some degree, Economy and Finance Minister Nikos Christodoulakis said. «The euro has acted as a brake, absorbing some of the pressure,» he said. The biggest impact has been on oil prices, with the euro blunting the effect of a near 20 percent price rise since mid-December. The comments came as the single currency hit a four-year high yesterday to reach $1.1, the highest level since March 1999. The surge came after US Treasury Secretary John Snow brushed aside concerns over the dollar’s slide. Christodoulakis also downplayed the long-term impact of geopolitical uncertainties on growth prospects. «It’s all circumstantial,» he said. He said the eurozone is expected to outpace last year’s anemic growth rate – estimated at around 0.8 percent – this year despite coming under pressure. Greece in particular is on course to reach its target. «The 3.8 percent growth rate is feasible,» Christodoulakis said. Separately, the minister also announced a crackdown on public utilities’ expenditures after ordinary budgetary statistics for January showed a 33.3 percent jump in primary spending against an annual target of 6 percent. Auditors have been directed to go over the utilities’ salary payouts, hirings, invoices, advertising expenditures, subsidies, investments, borrowings and asset management. The Public Debt Management Agency has been ordered to look into their debt portfolio with the goal of cutting debt servicing costs. Twenty public utilities are currently drafting business plans which will focus on balanced budgets and profits. The plans, expected to be ready by the end of the month, will be evaluated and monitored by soon-to-be appointed advisers. Offshore companies also came under the spotlight yesterday as Christodoulakis announced measures lessening the attractiveness of the vehicles for tax-evaders. The companies will need to pay an annual 3 percent tax on their Greek real estate holdings, with the payment due by July 20. In the runup to the deadline, assets transferred over to the actual owners will be exempted from the 3 percent levy and only subject to half the transfer tax. Businesses that buy the products or use the services of offshore companies will no longer be able to charge the expenses as tax credits. Responding to perennial complaints of government red tape, Christodoulakis said procedures over the setting up of companies and change of offices or business will now be simpler and accessible either electronically, via fax, telephone or correspondence.