ECONOMY

Central gov’t debt 6.9 pct

With closely matching views on macroeconomics and transparency in public finances, the two old acquaintances, Bank of Greece Governor Nicholas Garganas and new Economy and Finance Minister Giorgos Alogoskoufis did not have to try hard to reach an understanding at their official meeting on Friday. Besides, central bank data did not leave much room for doubt: the central government’s debt reached 6.9 percent of gross domestic product (GDP) in 2002 and 5 percent in 2002, confirming Alogoskoufis’s estimates How great the general government deficit was – the one they worry about in Brussels – is a related but different matter; in all probability, it will considerably exceed the prescribed limit of 3 percent and will require a revision of the Greek Growth and Stability program in order to provide a more accurate basis for future years. When questioned, Alogoskoufis insists he wants full exposure of the deficits, unable to bear «the continuous sweepings under the carpet, which year by year have distorted the basis on which economic policy is formulated.» Confronted by the precedent of the Portuguese government, whose similar attitude led to budget stringency and unfavorable repercussions on the economy, he counters with the examples of France and Germany, which adapted their programs without any particular problems. The new government’s economic chief believes the covering of the deficits will be facilitated by the fact that there will be no Olympic expenses next year, and it will be easier to spread them out in future years. He assigns particular importance to relations with Brussels and, for this reason, he intends to include prominent economists to his entourage, like Oxford Professor Antonis Kourakis, who will head the government’s economic think-tank. In all, he considers that transparency and stable rules must prevail again in fiscal management. Alogoskoufis believes the country will face no borrowing problem – a view which Garganas shares. Nevertheless, there is no escaping the fact that the existence of the «holes» in public finances makes it more difficult for the government to meet its pre-election promises. Among the government’s priorities is trimming down the Financial Crimes Squad (SDOE) and ridding small and medium-sized firms (SMEs) of the nightmare it posed for them. Until the agency is reorganized, inspections have already been restricted to the distribution of goods. Ministers, particularly the deputy for finance, Adam Regouzas, says they are aware of extensive corruption in SDOE, noting that the hiring procedure for inspectors had acquired characteristics of an auction, the jobs going to the highest bidders, who expected to reap multifold returns. The agency overhaul will be combined with the introduction with taxation criteria for SMEs that will be as objective as possible and the abolition of sanctions for any deviations in mere formalities. Alogoskoufis assigns special importance to the deregulation of closed professions and markets so that the economy is enriched with new fields of activity and sources of wealth creation. His favorite example is the flourishing mobile telephony market. He also believes it very significant to delineate sectors of activity. «If you define a field of activity and sell it through international tenders to investors, you can expect a great deal,» citing the tourism sector as the most appropriate for the application of such a model. Unused public land, properly demarcated and free of any environmental regulations or violations of forestry legislation, could be tendered for the construction, for instance, of golf courses or tourism complexes that would upgrade the industry and bring added revenue, he says. Alogoskoufis considers crucial the choice of the new appointees who will head the big banks and utilities in which the government is a major shareholder, as well as the Capital Market Commission. The government is looking in Greece and abroad for professionals in their forties and of proven credentials and unblemished records to lead the National Bank (NBG), OTE telecoms, the Public Power Corporation and other organizations. The changes will be made without any haste, except perhaps NBG, where the sudden death of Theodoros Karatzas has created a vacuum that must be filled soon. Takis Arapoglou, of Citibank Europe, and George Provopoulos, of Alpha Bank, are the favorites. In all cases, particularly of listed corporations, there will be consultations with local and foreign institutional investors that are major shareholders. But, Alogoskoufis says, the government is seeking to consolidate a climate of confidence in the economy.