ECONOMY

Gov’t needs money to reverse negative pre-election climate

Last week’s government reshuffle, which was ushered in by the prime minister’s address at PASOK’s Central Committee session, could be viewed as something of an anticlimax. Public opinion had prepared itself for something «new» only to receive the message the next day that changes of personalities would only cause delays and are better avoided. We were, therefore, given the impression that nothing had really happened. «Our aim,» said Prime Minister Costas Simitis, «is to forge, decide on and implement a new development plan, a new plan for social justice and participation. To give a clear answer to all those extreme danger-mongers who cultivate a climate of insecurity in society about the prospects of the economy and the country after 2004.» But Mr Simitis also made specific references to a number of issues, such as «the consolidation of economic stability, the opening up of the entrepreneurial potential of the economy, the building of the economy and the society of knowledge, the development of infrastructures throughout Greece, boosting the outward-looking orientation of the Greek economy and the country’s regional convergence.» He also mentioned «the promotion of employment and the modernization of the welfare state, the creation of more and better jobs, the fight against poverty and social exclusion, the consolidation of the adequacy and viability of pensions, the continuous improvement of the health and education sectors.» This overwhelming range of the agenda tempts one to attempt a realistic assessment of the prospects; by contrast, the government’s economic staff, which remains almost unchanged, has a limited agenda. The fiscal situation is not enviable, as already in the first half of the year the government has spent much more and received much less than budgeted. Usually, this is not a problem for a government preparing for elections but it is a problem when it cannot increase pre-electoral spending even more. So the government must to set out to find money. The public subscription for the second partial privatization of football pool and games of chance operator OPAP is taking place this week, the listing of the Piraeus Port Authority is in the works and a further tranche of the Public Power Corporation is being prepared for floatation in September. But even this is not enough; pending are the partial privatization of the Public Gas Corporation, the sale of the Postal Savings Bank and of land belonging to Hellenic Tourism Properties. To be sure, however, these are issues that have been on the agenda for some time and it seems safe to assume they will continue to be for some time to come… Besides the fiscal side, the government’s quest for money will also create the illusion of an improvement in the real economy and on the stock market. Last week’s unveiling of the draft bill for improved investment incentives has the same aim, although it is unlikely to become law. Even if it is, it is certain not to attract a great deal of foreign investment before the elections. All in all, given that the government does not seem likely to push through any important initiatives, it should hope for nothing short of a spectacular improvement in the global economy for a reversal of the negative climate.