Christodoulakis calls for ‘orderly’ changes in exchange rates

Economy and Finance Minister Nikos Christodoulakis yesterday called for «smooth and regionally balanced» exchange rate adjustments to effect an «orderly correction of current account and fiscal imbalances» in a speech delivered at the annual meeting of the World Bank and the International Monetary Fund (IMF) in Dubai. Defends convergence charter Christodoulakis also confirmed once again that «the Greek government remains fully committed to upholding the (European Union’s) Stability and Growth Pact,» taking a position opposite that of France, which has said it will persist with deficits higher than those allowed by the Pact. As for Greece’s deficit this year, Christodoulakis said, «It is expected to be contained at slightly over 1 percent of GDP, despite the high costs of preparing for next year’s Olympic Games.» The official estimate of the general government deficit, published in the 2003 budget last year, was that it would reach 0.9 percent of GDP. Christodoulakis also presented the main features of the government’s «Convergence Charter,» defending it from allegations that it is a package of pre-electoral handouts and promises. «It is our conviction that high growth rates cannot be sustained for long if all citizens do not share in the benefits. A more equitable distribution of income is not only (desirable), but also a prerequisite to the growth process itself,» Christodoulakis said. He also pledged to reduce Greece’s defense spending from a «formidable» 4.5 percent of GDP «to about 3 percent over the next five years.» The resources saved will be committed primarily to education, he said. Against big dollar slide Speaking about the global economy, Christodoulakis said he expected a recovery to begin in the second half of the year and «gather momentum in 2004.» He aligned himself with the European position which holds that «exchange rate regimes which are increasingly perceived as unsustainable, excessive current account imbalances and related changes in levels of foreign exchange reserves should be avoided.» Without naming names, he was alluding in this passage to the United States’ excessive current account deficit which, he implied, should not lead to an excessive depreciation of the dollar against the euro, thus hurting the competitiveness of European products.