Government uses 500 bln bond issue to tackle huge debt

In its efforts to reduce the country’s huge debt, the Greek government announced a 500-billion-drachma bond issue based on receipts from the Third Community Support Framework, a program funded mainly by the European Union, and through which more than 17 trillion drachmas will be invested in Greece by 2006, mainly on infrastructure projects. The proceedings caught the attention of EU Commissioner for Regional Policy Michel Barnier, who has demanded an explanation so that he can decide on the legality of the issue. So far, the Greek government believes that Barnier’s intervention will merely delay the bond issue, initially scheduled for mid-October, not abort it. The proceedings will be completed by the end of November, Deputy Finance Minister Giorgos Drys told reporters yesterday. Barnier had been apprised of the issue by Costas Hadzidakis, an opposition New Democracy deputy to the European Parliament, who had tabled a question to the Commissioner. On September 3, Barnier replied to Hadzidakis that the Commission has been made aware… that the Greek government is preparing financial transactions that could have an impact on the operation of European structural policies… The Commission has demanded additional information from the Greek authorities in order to decide on further action. The government wants to lower the debt to 96 percent of the country’s gross domestic product by the end of 2001. Only Italy and Belgium, among EU members, have a higher debt-to-GDP ratio. TANEO is headed by Chief Executive Giorgos Kintis. Applications for funding are open until December 31, 2004.

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