ECONOMY

Government plans major drive for privatization of state holdings

The government is reportedly determined to push ahead with significant privatizations of big state companies. The plan bears the approval of the prime minister and is meant to be realized within 2005. Its aims include pushing the Athens Stock Exchange (ASE) higher and bringing greater revenues to the problematic state budget in the current year. The scheduled privatizations will include the allocation of large stakes and the management of OTE telecom, Emporiki Bank, gaming company OPAP and Olympic Airlines, where the process is already underway. These are four very important cases which could substantially alter the climate in the market, free up economic resources for investments and raise the productivity of the economy. They may also attract foreign capital with know-how, further boosting the economy’s competitiveness. The stakes of these companies on sale will be at least 35 percent, so that candidate buyers have an incentive to profit from the investment, and will be made via open international tenders. The government believes, according to sources, that Olympic Airlines will be sold first (expressing certainty that this latest attempt to sell it will be successful), followed by OTE. This explains the preparatory steps that have included a voluntary retirement scheme and the prospect of lifting the permanency status for newly hired employees. This has been an apparent clearing process to allow for the privatization of the telecoms giant and the wooing of a big outside investor. In this sense, the rise of OTE’s share on the ASE is no coincidence, despite the corporation’s announcement of lower profits. After OTE, OPAP will follow, a company which over the last few years has put it largely outside efforts to control it. The whole issue of the gaming industry has to be placed on a fresh basis. Regarding banks, the priority for the government undoubtedly is the sale of Emporiki Bank to the private sector. The prime minister wants a solution to the major social insurance problem the bank is facing (in case the single solution for all banks does not bear fruit, as seems likely), for the privatization process to start next. The French management of Credit Agricole, who have the right of first choice, will of course have to be asked whether they wish to purchase the state’s stake immediately and with it take over the bank’s management. In case they demur, a tender will be made along with an arrangement of the percentage the French bank holds to date. On a secondary level in the banking sector, the government is examining the public listing of 25 percent of the Postal Savings Bank by the year’s end, aiming to seek through tender its transfer to a private strategic investor by 2006. Furthermore, the stakes that social security funds have in the National Bank of Greece will probably be sold to private parties next year, as the issue has been seriously discussed. It is a scenario that is much more complex, but not beyond debate and scheduling. From the coming year’s privatizations, it is obvious that the government will reap maximum benefits on two levels: First in the stock market, which will be revitalized, feeding expectations and raising company values as well as the value of state property; and second, in revenue, to tame the public deficit and feed the state budget, whose disputed debt levels have provoked EU warnings. Generally, with this prospect at hand the government can benefit from the swing of the business climate (as complaints about delays in the economic sector are plenty) and from the strong message of determination regarding structural changes that will be sent to the international economic and investing community.