Privatizations put off

The government is considering a postponement of further structural changes in the economy, particularly the partial privatizations of OTE telecom and the Postal Savings Bank (PSB), as a result of the negative political climate and disagreements between ministers. The ongoing allegations of scandals involving the purchase of overpriced government bonds by social security funds has cast a shadow over the political climate for about two months now. «You cannot promote reforms of such breadth at a time when everything is being criminalized. As a result, the placements are being held back,» says a top government official, who emphasized that such moves would require the «full support of all ministers.» Besides the soured political climate, the ongoing allegations have also strengthened the position of «statists» within the ruling New Democracy party, who, in view of the possibility of early elections, favor the maintenance of OTE and PSB under public control. «Technically, we are ready to carry out the two placements immediately. The markets are favorable and the issue of a strategic investor in OTE has been clarified,» say officials at the Economy Ministry, which has decided that the privatization will merely involve a placement with institutional investors, after the search for a strategic investor proved fruitless. Economy Minister Giorgos Alogoskoufis seems to consider it more politically digestible the further privatization of OTE in two phases: one placement of 15 percent, which will bring the government’s share down to 23.5 percent, before the elections, and a second tranche of shares after the elections, either to institutionals or to a strategic investor. Regarding PSB, the government plans a placement of about 20 percent so that its stake falls to below 50 percent from today’s 65.1 percent. Alogoskoufis is said to be anxious to secure the backing of all ministers for the two plans, particularly of those on the privatization committee, which will meet at the end of the month. Until then, he is oriented toward «low policy» issues of less political bearing, such as changes to the management of the assets of public utilities and progress in the implementation of projects under public-private partnership schemes (PPPs). The government will also submit to Parliament two bills by early June, for the management of the European Union-subsidized Fourth Community Support Framework investment program (2007-2013) and tax evasion, respectively.