The government’s fiscal stability and development program, which it submitted to Brussels on Thursday, portrays its intention to implement an extensive series of important structural reforms, and as such it is encouraging. Indeed, if it is not a map exercise but a well-structured program with realistic targets, it is obvious that Greece cannot achieve a growth rate of 3.8 percent in 2006 and 2007, and raise it to 4 percent in 2008 without sound structural changes. To be sure, Greece managed to maintain a satisfactory growth rate this year, projected at 3.6 percent – double the eurozone average. And it is an indisputable success on the government’s part that it achieved this at a time when it imposed serious cuts on public spending in order to lower the deficit. This success was basically due to the government’s mild fiscal adjustment policy, which particularly saved the budgets of the lowest-income families from severe burdens. However, we should note that, besides private consumption, growth has also been kept brisk with consumer and mortgage loans, which have been favored by low interest rates. But because from next year fiscal adjustment will become stricter, as the country has to bring its fiscal deficit below the EU-mandated 3 percent ceiling, the flow of public money to the economy will fall and private consumption will be affected accordingly. The stability program provides for real salary increases of 1.7 percent in the next three years, from 2 percent this year and 3.3 percent in 2004. At the same time, the projected gradual ascent of interest rates is bound to slow down the growth of mortgage and consumer loans. This prospect of a shrinking demand obligates the government to adopt supportive measures for growth in the areas of private investment and in structural changes. The prospects for investment do not look particularly good. Despite the ample liquidity in the market and the high profitability of listed companies (up an average of 40 percent from last year), investment in industry and tourism has not picked up. We have only seen big investment in big malls. If private investors have available capital and do not invest it, it means that they are not happy with the business environment. The government, therefore, must proceed to bold reforms which will free the productive forces of the economy and improve the investment climate. The recent labor reform in public utilities is historic but a lot remains: a simplification of the tax system, a reduction in red tape, making zoning legislation much clearer, and, finally, the establishment of a transparent environment which will eliminate corruption. The government must set the pace for such changes next year with a bold privatization program which will attract from abroad significant amounts of capital, dynamic entrepreneurs and, above all, know-how and innovative ideas. If such changes are not forthcoming, the stability program is bound to remain a map exercise.