ECONOMY

Christodoulakis races against time, uphill

Economy and Finance Minister Nikos Christodoulakis has a heavy workload ahead, virtually a race against time to implement a series of reforms that should have been put in place years ago. His sense of urgency, accentuated by the slow pace and obstacles to the privatization program, the impact of the global recession on the economy, and the prospect of administrative inertia ahead of municipal elections next year, was amply demonstrated during discussion of the 2002 budget in Parliament last week, where he emphasized the necessity for speeding up all-round reforms. Observers attribute to this sense of urgency and limited time the recent listing on the Athens bourse of the Public Power Corporation earlier this month, which some criticized as being hasty after the share price fell below the flotation level in the first days of trading. A similar case was that of the Agricultural Bank, whose privatization stalled after being announced, as the problem of 1 trillion drachmas worth of bad debts came increasingly to the fore. There is also a hitch in the privatization of Hellenic Shipyards, which, even though announced before the ruling PASOK party’s congress in October, subsequently ran into difficulties, also blocking the sale of majority shareholder ETBA bank to Piraeus Bank. Despite the difficulties, contradictions and the frequent manifestations of a slapdash attitude, the Economy Ministry is preparing a series of crucial reforms which will also determine Christodoulakis’s political future. The first reform concerns a new generation of structural changes oriented towards the formation of alliances of big public utilities with European partners with a view to improving their presence in the single European market. A draft bill on mergers, to be tabled shortly, will include provisions for the creation of such alliances. A further draft bill on privatizations, scheduled for tabling in January, is projected to facilitate the process. The second reform concerns the investment incentives law, for which a draft bill is expected to be completed in the first half of 2002, overhauling the philosophy and targets of incentives. The framework currently in force was based on the principle of subsidizing entrepreneurial risk, but under the new concept, performance of enterprises will be rewarded through taxation or other measures. The third reform concerns the taxation system and is also projected for completion within the first half of 2002. It will by all accounts introduce a radical simplification of procedures, particularly concerning wage and salary earners. It is also said to target improvements in competitiveness and reducing tax evasion, particularly through dealing with the widespread phenomenon of bogus receipts. Furthermore, it will strive to harmonize the body of real estate taxes with the rest of the European Union in order to provide a boost to this emerging market. The fourth reform concerns the completion of a modern framework of authorities to oversee market sectors, with a draft bill scheduled to be tabled next month. It will set up financial and insurance ombudsmen, as well as a disciplinary council for the capital market, which will also be required to report regularly to Parliament. Officials say they wish to improve and boost the powers of the Competition Commission and regulatory authorities, with a view to achieving greater coordination at national and European levels. Such changes are seen as containing the potential of upgrading Greece into a regional financial center of the European Union, which should be helped by the introduction of the euro. The restriction sought by the EU on the activities of offshore companies and tax havens is expected to attract more capital to the countries that have fair taxation system. The fifth reform will target the setting-up of a sound framework for private financing initiatives in public projects. The relevant draft bill is projected to be tabled in February, and will aim at boosting private participation in projects under the EU-subsidized third Community Support Framework investment plan, and encourage local investment schemes. The sixth reform concerns promoting entrepreneurship, particularly in the New Economy and advanced technology sectors through venture capital schemes such as TANEO (New Economy Fund). It will also aim at the setting-up of a Surety Fund for small and medium-sized enterprises and the networking of Greek enterprises on the World Wide Web.