Gov’t considers massive privatization program to exit fiscal straits in 2006

Facing a hard line on fiscal propriety by the European Commission, the government is considering a massive privatization program, based mainly on state holdings in banks, and cuts in public expenses that would bring the 2006 budget deficit still lower from the planned target of 2.8 percent of gross domestic product (GDP). Ministers hope that such additional measures will create a favorable environment for Greece in January’s session of the EU economy and finance ministers council (Ecofin), which has to give the stamp of approval to the budget. The country has been placed under supervision for its public finances since it was found to have more than twice exceeded the prescribed deficit limit of 3 percent in 2004. According to sources, Economy and Finance Minister Giorgos Alogoskoufis is planning to send a letter to Economic and Monetary Affairs Commissioner Joaquin Almunia next week, setting out a privatization program which could boost state coffers by more than 2 billion euros. Of this, an estimated 500 million euros is seen coming from the sale – by March at the latest – of a major chunk of Emporiki Bank, in which the government directly or indirectly controls about 42 percent. A plan to float the Postal Savings Bank on the stock market could yield a further 1.5 billion euros.