ECONOMY

Gov’t starts new round of talks on bank pensions

A new round of negotiations on the pressing issue of funding banks’ social insurance liabilities will begin in the next few days, it transpired on Wednesday after a meeting between Prime Minister Costas Karamanlis, Economy and Finance Minister Giorgos Alogoskoufis and Takis Arapoglou, the president of National Bank (NGB). NBG’s stance is considered key for a solution, as the country’s biggest bank argues that its legal position on the issue is different from the others and poses no risk to its capital base. The matter is considered pressing as listed firms this year will have to write their social insurance liabilities on their balance sheets, according to the requirements of International Financial Reporting Standards. The liabilities of some of them, particularly Emporiki Bank, are so large that these are projected to seriously erode their capital base. A first round of intensive deliberations before Christmas, chiefly between banks and their employees, ended in deadlock. Banks themselves appeared without a common stance on the issue, the main stumbling block being NGB’s differentiated position. Both sides, however, favor the integration of funds into one and differences center mainly on the legal status of the scheme. The government’s position in the new round is expected to remain the same as previously; that is, maintaining an equal distance from the two sides directly concerned and appearing in the role of mediator. So far, it has said it will contribute its financial share to a solution but has otherwise urged the other two parties to reach agreement. Nevertheless, the government cannot be seen as disinterested, as a solution is considered important for the economy as a whole. For a start, it would send a message to investors that structural changes are taking place in Greece, even though quite late, and, secondly, it would avert a crisis in the banking system, which would almost certainly have serious implications for the stock market. On the whole, the government is embarking on 2005 with an image of having rolled up its sleeves in order to deal with the economy. A major target is achieving a drastic cut in the public deficit this year, from 5.8 percent of gross domestic product in 2004. The European Commission has cast doubt on the government’s ability to reach its budget target of 2.8 percent.