ECONOMY

Government hunting for manager to run EYDAP

The government has placed its hopes on the economy boosting its popularity and reversing the negative trend shown in opinion polls. Yesterday, Economy and Finance Minister Nikos Christodoulakis announced that the State is looking for a strategic partner to take over management at the Athens Water and Sewage Company (EYDAP). The partner would obtain 20.3 percent in EYDAP, a listed firm, of which 10.3 percent is held by the State through its portfolio management company and the other 10 percent by state-controlled Agricultural Bank. Christodoulakis said that the strategic partner would be a company with experience in the sector, adding that the government had hired investment bank Salomon Bank and Piraeus Bank to act as advisers. This latest move is part of Christodoulakis’s strategy to proceed with partial sell-offs of public companies in order to ensure revenue and to provide a boost to the Athens Stock Exchange, which has just come out of a three-and-a-half year fall. Banks Turning to the banking sector, Christodoulakis said that the engineers’ pension fund TSMEDE was in talks with Attica Bank for a full privatization. TSMEDE is already the bank’s biggest shareholder. Concerning General Bank, controlled through the armed forces’ pension fund, he said that it had been decided last Friday, at a meeting with Prime Minister Costas Simitis, that it would be best to privatize it on its own rather than merge it with another state-controlled bank, such as Attica or the Postal Savings Bank. Christodoulakis would not comment on an article, published in Sunday’s To Vima newspaper, that the government would sell at least part of its stake in National Bank, Greece’s largest. He did say, however, that reducing the stake remained the government’s «long-term goal.» High spending Christodoulakis expressed his satisfaction about investors’ response to the floating of a 25 percent stake in the Piraeus Port Authority, a move which will bring 55 million into state coffers, he said. In fact, the government is desperate for additional revenue so it can bring down public debt from 105 percent of the country’s gross domestic product (GDP) to just over 100 percent this year. All revenue from privatizations will be used to this end, although the government may be tempted to divert proceeds elsewhere a few months before the elections. Public spending is almost getting out of hand. In the first half of the year, it rose 12 percent compared to the same period last year. The 2003 budget has set a target of 6 percent for the whole year. Christodoulakis excused the overspending by saying it was all for emergency needs and adding that second-half spending would be tighter. But balancing the budget will be even more difficult than in 2002, when the government cut 1.5 billion euros from the Public Investment Program to achieve its target. This time round, it cannot rely on financial instruments such as swaps without adding to the debt burden.