ECONOMY

SEV warns government to begin acting on economy

While the government reveals new instances of overspending, the Federation of Greek Industries (SEV) revealed its first signs of impatience with the newly elected government’s inertia by asking for specific policies and decisions. «It is not right to criticize a government after only two months,» SEV Chairman and Executive President Odysseas Kyriakopoulos told reporters, before proceeding with his criticism. «The Olympic Games, even the Cyprus issue, should not be allowed to affect all of society. A successful Olympics may be a national goal that must be achieved; however, there is a margin for action to promote important issues related to the economy,» he added. «What needs to be done above all is to relaunch growth. The inspection of public finances must finish, and specify goals and strategies against the increased deficits that the new government has found,» Kyriakopoulos said. «In our annual general meeting, which will take place on May 26, we expect to hear that steps have been taken. We want no more declarations, we want results. We want to see the market move. We must all start working because we are in a race,» SEV’s chief added. Concerning the ballooning budget deficit and the public debt, Kyriakopoulos repeated SEV’s longstanding position, noting that spending should not increase at a pace higher than the inflation. He added that this may be difficult to achieve this year because of the Athens Olympics but that in 2005 the government should aim at cutting expenditure. The government should not wait until the autumn to submit its expected legislation on tax reform in order to produce results, but it must begin acting now, taking advantage of existing laws, Kyriakopoulos said. The business world, he said, is expecting the new government to show signs of its credibility. SEV placed as an immediate priority the return of value-added tax (VAT) to exporting firms. The return has been delayed by over six months, Kyriakopoulos remarked. SEV, GSEE ‘close’ Concerning the negotiations with unions for a wages agreement, Kyriakopoulos said that SEV and the General Confederation of Greek Labor (GSEE) were close to agreement. «There is a distance still separating us, because of (the unions’) heightened expectations.» He added that about 1 percent in pay rises separated the two sides, which are due to meet on May 13. GSEE has threatened to begin strike action if no agreement is reached by then. Overspending Deputy Economy Minister Christos Folias yesterday revealed that the Public Investment Program faces a deficit of over 2 billion euros this year, because of overspending on the Olympic Games and an inability to absorb funds from the EU’s Third Community Support Framework (CSFIII). Folias said that many public projects had overshot their budgets by far: For example, one project initially budgeted at 20 million euros ended up costing 130 million. The previous government expected to absorb just over 4 billion euros from CSFIII, but, at the end, no more than 2.9 billion will be absorbed, said Folias, adding that Greece had absorbed only 21 percent of the funds available. The program officially ends in 2006, but governments can get funds two or more years after the official closing deadline. Deputy Minister Folias proposed that more funds should be going toward the private sector.