Greek PM praises EU focus on growth, eyes recovery next year

BRUSSELS – Prime Minister Lucas Papademos said he will be returning to Greece following the European Union leaders? summit in Brussels on Friday «more hopeful» about the future as the EU has placed additional focus on growth, adding that he expects the Greek economy to begin showing signs of recovery by mid-2013.

?I return to Athens more hopeful as a result of the decisions taken at the summit,? he said.

?Growth is now Europe?s top priority. Decisions have been taken that will promote growth. This will help Greece exit from the crisis and will help with our fiscal consolidation,? Papademos said.

Focusing on the quicker and more effective absorption of EU structural funds, which was also the subject of Papademos?s meeting with European Commission President Jose Manuel Barroso on Wednesday, the Greek prime minister said that an inflow of funds would be used to tackle ?unacceptably high? unemployment in particular.

Eurostat figures published on Thursday showed the Greece posted the highest rise in unemployment across the EU last year, as the jobless rate shot up above 20 percent.

Papademos said that Greece?s ability to absorb structural funds, which has been notoriously poor, improved last year when almost 100 percent of targets were met. The European Investment Bank will be brought into a scheme to provide Greek Small and Medium-sized Enterprises with capital funding via a guarantee scheme, he added.

Papademos said that as long as Greece?s economy — which shrank by 7 percent of GDP last year — continues to contract and unemployment rises, efforts to reduce the country?s public deficit and debt would be undermined.

The Greek premier said it was time to end the ?vicious cycle? that the Greek economy finds itself in as a result of repeated austerity measures.

He identified several steps that could be taken to improve economic conditions in Greece: better use of structural funds, the completion of several highway projects, the recapitalization of Greek banks, more focus on renewable energy, exploration for fossil fuels, and improvements to tax collection as well as reform of the taxation system.

?We need a stable, simple and socially just tax system,? Papademos said, adding that the new tax scheme would probably be ready in the middle of this year.

The prime minister argued that the combination of the new bailout, structural reforms and use of EU funds would help lead the Greek economy to recovery.

?By mid-2013, we might start seeing the signs of recovery,? he said.

Papademos added that he was confident that Greece?s debt restructuring, or PSI, with private bondholders to reduce debt by more than 100 billion euros would progress according to plan. He refused to be drawn on a comment by Luxembourg Prime Minister Jean-Claude Juncker referring to a ?Plan B? for Greece if PSI does not succeed.

?There is no point in speculating at this moment,? he said.

?I cannot make a specific prediction on the participation rate but I think it will be significant,? the prime minister said. ?The offer has attractive features.?

The Greek prime minister added that there was no discussion about a European commissioner being stationed in Greece but that both the presence of the troika and the EU Task Force would be strengthened.

He said the structural reforms Greece has pledged to adopt as part of its new, 130-billion-euro bailout would progress as planned, adding that the government hopes to announce a restructuring of the civil service within the next 10 days.

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