ECONOMY

Gov’t happy with results of two years of reforms

The government’s economic reforms are making visible progress and made a major contribution to attracting more than 3 billion euros in investment into the country, Economy and Finance Minister Giorgos Alogoskoufis said yesterday. In his first report on the National Reform Plan for the 2005-2008 period, Alogoskoufis said the reforms put in place to date have vindicated the government’s policy of mild fiscal adjustment, which has achieved a reduction in the budget deficit by about 5 percentage points in the last two years. «The reduction came from interventions on the expenditure side, not by raising taxes,» he said. Moreover, the reduction did not affect the country’s growth rate, which remains among the highest in the European Union. Alogoskoufis singled out changes in the tax system as the biggest reform of all but said the most difficult was the solution to the problem of unifying banks employees’ disparate social insurance funds. He said a crucial reform, which had to be implemented at all costs, was the legislation concerning labor regulations in public utilities, while the decisions regarding the most difficult nut to crack, reforming the country’s social insurance system, will have to be made by the next government. «The efficient handling of reforms presupposes society’s agreement,» he said, adding that in other European countries, citizens also distanced themselves from reforms due to inadequate communication. Alogskoufis said the changes at microeconomic level were spearheaded by a new investment incentives law, which has boosted competitiveness and led to a spectacular rise in exports. They also include a new energy strategy that aims to make Greece a hub in the region, a new bankruptcy law and a new policy of support for small and midsized firms. Responding to Alogoskoufis’s statements, the Federation of Greek Industries (SEV) said the success of the National Reform Plan will depend on speed. «It is a road map and we know where it is taking us but the question is how fast we run,» said SEV officials. They noted delays in market deregulation and electronic governance, adding that the very important tax reform had to be supplemented by an urgent codification and simplification of tax legislation. The main opposition PASOK party’s economic affairs spokeswoman on economic affairs, Vasso Papandreou, said the government’s top reforms, such as the tax cuts in corporate profits and banks’ social insurance system, had been «in favor of capital and at the expense of the many.»