Bankers make the case for less interference from state

Top bank managers yesterday stressed the need for a shrinking of the state and a freer hand on market forces. Speaking at a conference on the post-Olympic prospects of the Greek economy and enterprises, the bankers said it was vital for Greece’s credibility to achieve the ambitious goal of reducing the budget deficit to 2.8 percent of the country’s GDP in 2005, from a projected 5.3 percent in 2004. They also said that, provided certain conditions are fulfilled, the positive impact of the Olympic Games could be bigger than in other recent host countries. Nikos Nanopoulos, chief executive officer of EFG Eurobank Ergasias, stressed there was a need for structural reforms across all economic sectors and the state. The main immediate priorities are to maintain a high rate of growth, adopt prudent management of public finances by cutting out excess spending, cut down on red tape, proceed with more privatizations and linking pay to productivity. He added that it was time for the public sector to shrink. «It is especially important for our country’s credibility to execute the 2005 budget in its entirety (i.e. to meet all the spending targets) and restrict the public sector deficit to below 3 percent (of GDP),» Nanopoulos said. The way to capitalize on the success of the Olympic Games is through proper management and development of the venues, further development of the tourism industry, taking advantage of business opportunities and using private capital in big infrastructure projects. Nanopoulos concluded that the successful implementation of these plans requires decisive action on the part of the government. Emporiki Bank Chairman and CEO Giorgos Provopoulos was optimistic about the economy’s post-Olympic prospects. «The positive long-term effects in Greece will be greater than in Australia, Spain or Korea,» he said, referring to the hosts of the 2000, 1992 and 1988 Summer Games respectively. Provopoulos warned that these benefits were not guaranteed to appear automatically. «It will depend on the abilities of the state and private enterprise to devise and implement a strategy based on taking advantage of the so-called ‘immaterial capital’ created by the Olympics, that is, the positive image projected by the country, and of the sports venues and other infrastructure in a way that maximizes the benefits to society,» he said. Provopoulos also stressed the need to make efficient use of the funds provided by the European Union through the Third Community Support Framework (CSFIII). «The total amount of (EU aid through) the CSF is about 34 billion euros. So far, we have managed to get only 15 billion earmarked as aid,» he said, proposing changes in the way CSFIII is managed. The Emporiki head referred to the Balkan market as a great opportunity that must not be missed. He also referred to the scarce foreign direct investment in Greece and the importance of attracting more of it. «At the moment, it is important to simplify administrative procedures, adapt to international competition for lower taxes, ensure that our services are competitive, promote research, accelerate privatizations and to promote public-private partnerships,» Provopoulos said. He concluded by stressing the need to improve the education system and to use it to provide specialized knowledge. Nikos Karamouzis, deputy CEO of EFG Eurobank Ergasias, stressed the need to review the role of the state in the economy, in managing infrastructure and implementing welfare policies. «The broadly defined public sector still dominates the local economy to an extent probably not seen anymore anywhere in Europe,» he said. Not only that but, in many cases, state-controlled firms compete with private firms on unequal terms because they are not bound by the same corporate discipline constraints that an open market imposes. Karamouzis proposed an extensive privatization program, the adoption, sooner than later, of new types of cooperation between the private and public sectors, such as build-operate-transfer projects and public-private initiatives, as well as structural reform in markets and the welfare state. «Supporting extensive privatizations, the development of public property and the modern forms of cooperation between the private and public sector is not an ideological, but a pragmatic stance,» Karamouzis said. «I believe that the conditions are ripe to create a strong, competitive private sector, to release the creative forces that will lead the country to a new virtuous circle of real and sustainable prosperity,» he added.