ECONOMY

Gov’t effort to maximize EU funds, private capital

The Greek government expects Community funds and private capital to fuel the economy this year. After yesterday’s meeting between the prime minister and his economy-related ministers, a bill will be brought to Parliament regarding the European Union-subsidized Third Community Support Framework investment program, to simplify the process for project realization and to speed up resource absorption. Another bill, in the same vein, will refer to public and private partnerships, aimed at attracting private capital used for project construction, due to the restraint in state funds available. The combined activation of community resources and private capital could support the Greek economy for some time as it enters a difficult post-Olympic reality. The GDP growth target for 2005 is 3.9 percent; the government’s economists believe this is achievable, while both the European Commission and the Bank of Greece suggest otherwise. Another decision at yesterday’s meeting refers to the quick rescue of loss-making state companies, especially in transport and the military industry. Similar efforts have been made several times in the past but without success, as political will for real changes was lacking. The new year is a particularly tough one for the economy. Giorgos Alogoskoufis, the economy and finance minister, places great emphasis in proper budget implementation. This also means slashing the deficit from 5.8-6.0 percent of GDP in 2004 to just 3 percent in 2005. The target is highly optimistic and will only become reachable if there is effective control of state expenditure, which for years has been the unfulfilled desire of every economy minister. Equally important will be meeting the objective of increasing public revenue. In previous years this was tantamount to a constant tax chase, exhausting taxpayers. Although New Democracy, before being voted into office, had set itself against this mentality, in this instance it seems to be following suit and using the «terror» exacted by tax-chasing announcements of various state bodies. Particularly in revenue, the government has started facing reality and the problem of translating words into action. Proclamations about targeting corruption of the relevant mechanisms are no longer the priority; what is more important at this stage is finding revenue in any way possible. This makes cooperation with old, corrupt mechanisms necessary, although they remain unchanged. In addition, another decisive task for 2005 will be promoting structural changes in action, to send a message to foreign investors that something is changing in Greece. This is what the two laws (tax reform and investment incentives) are supposed to have been voted for. Their success will largely depend on the scope for reducing the generally existing corruption in the public domain as well as bureaucracy, a constant bane for inward investments.