ECONOMY

Urgently searching for revenue

Desperately seeking revenues, the government is ready to accelerate privatizations and ditch some of the pre-election commitments that were central to its drive to introduce a more moral, less corrupt model of governance. Yesterday, Economy and Finance Minister Giorgos Alogoskoufis confirmed that the government would like to introduce matches from the Greek soccer league into the popular «Pame Stoichima» (Let’s Bet) game, despite the fact that the company that provides the software for the game, Intralot, is owned by Socrates Kokkalis, the president of Olympiakos soccer club. Although Alogoskoufis stressed that OPAP, the state-controlled pool and lottery organization, would take over management of the game when the contract with Intralot expires, at the end of 2006, the government wants to introduce Greek League matches from next season. In 2002, PM Costas Karamanlis, then the opposition leader, had warned the government not to dare to include betting on Greek games in Pame Stoichima, arguing that the game would be tainted due to Kokkalis’s involvement. Introducing Greek games in Pame Stoichima, already OPAP’s most successful game of chance, is expected to boost the organization’s revenues and make it more attractive to investors in the upcoming sale of a further tranche. Currently, the state owns a bare majority (50.8 percent) of OPAP shares. While in opposition, Alogoskoufis had also criticized privatizations by the previous government, copying former British Premier Harold Macmillan’s saying about «selling the family silver.» His harshest criticism was reserved for the planned privatization of the Postal Savings Bank. Yesterday, Alogoskoufis announced the partial privatization of the Postal Savings Bank through its listing on the Athens Stock Exchange. He did not specify the size of the stake to be offered to private investors but did say that the listing will take place at the end of this year or the beginning of the next. «There will be a combined offer for retail investors in Greece and Greek and foreign institutionals,» he added. Alogoskoufis also repeated a previous announcement about the listing of Athens International Airport on the ASE and the sale of state-owned stock there. «Preliminary work has already started and the listing is expected for 2006,» he said. Alogoskoufis also referred to the sale, by the state, of a 10 percent stake in telecom giant OTE and the Agricultural Bank. Agricultural Bank is controlled by the state, which owns 84.5 percent, while the majority, about 63 percent, of OTE shares is owned by private investors but the state still owns a blocking minority. The 10 percent stake in OTE will come from maturing share-convertible certificates whose owners are not expected to exercise conversion options, since the share was set at too high a price. In outlining government plans for OTE, Agricultural Bank and OPAP, Alogoskoufis broke with his past practice of not making advance announcements for already listed firms, in order not to affect their price, as he once said. It appears that the government is far less reticent in this and is doing everything it can to boost their market price in order to maximize its revenues from future privatization proceeds. This is largely due to the fact that, as current data show, it has fallen far behind in its revenue targets for the year. Having promised the EU that it will boost revenues by 11.4 percent this year in order to help shrink the huge deficit, the government has only managed to increase revenues 4.7 percent in the first quarter. Even after the introduction of higher VAT rates, in April, unpublished figures show that revenues have only risen about 6 percent so far, compared to the same period in 2004. If the present trend continues, Greece will not be able to shrink its budget deficit below 3 percent of its GDP by 2006 and the EU may demand harsh spending cuts.