ECONOMY

Hot summer for economy

The government’s summer agenda is going to be full this year, as the government is trying, following a period of inactivity, to push through overdue reforms. Prime Minister Costas Karamanlis and Minister of Economy and Finance Giorgos Alogoskoufis agreed yesterday that the priority is to complete the integration of bank employees’ pension funds and to ensure that the voluntary redundancy program currently under way at former telecommunications monopoly firm OTE is smoothly executed. The changes in the status of the pension funds have been included in a draft law on the Capital Market Commission. Discussion on the bill began yesterday by Parliament’s Economic Affairs Committee. The government aims at passage of the bill by the end of next week, before the start of the three summer sessions. Alogoskoufis told reporters after leaving the PM’s office that the measures provide for a «balanced solution» that will both keep banks from being overburdened by liabilities and will not encroach on the rights of employees hired before January 1, 1993. Alogoskoufis will have to submit two more important pieces of legislation to Parliament: By the end of the week, he will submit the law on public-private partnerships allowing most big public projects to be financed by the private sector. Then, he will present the new property law, which is set to impose value-added tax on new construction, beginning on January 1, 2006. Beyond this legislation, the government is also worried about future funding from the EU. The collapse of last week’s Brussels summit meant that Greece is now far from certain to receive the 20 billion euros in EU aid it wants for the period 2007-2013. This would be the amount Greece would have received had the proposal of the presiding country, Luxembourg, been accepted. As things stand, and with the larger countries insisting on a reduced budget, Greece can expect no more than 13 billion euros, at best. By comparison, the Third Community Support Framework (CSFIII) had earmarked over 28 billion euros for Greece. Greece depends on EU funding to implement its budget and sustain its above-EU-average economic growth. Alogoskoufis is also aware that, at present, he will be unable to stick by his commitment to the EU to reduce the budget deficit to below 3 percent of GDP by next year. Revenue growth is weak and spending has not yet been reined under tight control. That is why Alogoskoufis included, in the bill on the Capital Market Commission, a provision allowing the government to, essentially, borrow in advance from future tax revenues. This method had been used by the previous socialist government, which Karamanlis and Alogoskoufis had accused of fiscal irresponsibility. Alogoskoufis hinted yesterday that the final 2004 budget deficit may be even higher than the announced 6.1 percent of GDP. On the privatization front, Alogoskoufis announced that the sale of a fourth tranche of shares in Europe’s biggest lottery and betting company OPAP is proceeding as planned, denying media report of a delay. «No, the procedure continues normally,» he told reporters when asked if there was a delay in the further privatization of OPAP, but did not elaborate.