ECONOMY

Turning to the economy, at last

Economic considerations appear to be gaining the upper hand over political expediency in governmental priorities, a year after New Democracy assumed power. Up to now, political considerations have been dominant, leaving the economy to play second fiddle, risking the possibility that growth could lose its steam. The prime minister himself was behind this shift in focus, the government’s spin doctors suggest, by opening his office to businessmen this past week. Now, the same sources say, many entrepreneurs are asking for an appointment with Prime Minister Costas Karamanlis in order to express their views and plans for investments and the development of the sector they represent. This means, according to government associates, that the business climate (which has deteriorated in recent months) may change, with the help of appropriate government initiatives, from the moment Karamanlis himself has signaled a decisive turn toward encouraging and boosting the private sector. The prime concern today is the creation of conditions and opportunities to mobilize large investments from Greece and abroad, the same government associates stress. Karamanlis’s planning assumes continued high growth rates in the coming years and fiscal reform by the end of 2006, in order to proceed to fulfilling his electoral commitment for benefits in 2007, a year before the 2008 elections. This makes sense. An extra push is being given to the private sector now, for it produces revenues, competition, investment plans, jobs and profits (and, therefore, tax revenues). This is the intention at least; what the government will actually do remains to be seen in the next few months. In terms of planning, the word is that privatizations will begin this summer, with Olympic Airlines being the priority (the sales procedure is already underway), and Emporiki Bank, where the privatization program is being discussed. We are also awaiting the policy for attracting foreign investments to the tourism and energy sectors. To attract foreign investors to the tourism sector, three ministries are cooperating right now (Environment, Town Planning & Public Works, Tourism Development and Economy & Finance) toward a new legislative framework to lift serious administrative obstacles and cut investment implementation times significantly. At the same time, the government is promoting the long-delayed electricity market liberalization, where major foreign energy groups have already submitted investment proposals worth 1 billion euros. New legislation on the future use of Olympic properties will help boost both tourism and investments, government sources say, adding that interest has been expressed in large investments that make the most of three specific areas. This will considerably boost Athens as a tourist destination. Jointly financed transport projects are expected to contribute toward an increase in productivity and a decline of public sector spending. The important thing, according to government officials, about the policies announced by Environment and Public Works Minister Giorgos Souflias (such as concessions of toll gates) is to secure the resources to complete these grand projects and to make the construction sector active again, offering tens of thousands of jobs. The construction and completion of the Patras-Athens-Thessaloniki-Evzones national highway, the Ionian Road, the Egnatia Road and others will considerably upgrade Greece’s highway network; this in itself will be an immense success, based largely on private capital. The government is also determined to legislate longer shopping hours to facilitate competition in retailing and to limit inflationary pressures. In the next few months we should also expect a serious blow to the supermarket cartel, in the name of promoting healthy competition and fighting inflation.