Bank at center stage

Bank of Greece Governor Nicholas Garganas held consecutive meetings with Prime Minister Costas Simitis and Finance Minister Nikos Christodoulakis yesterday in what was widely seen as an effort by the government to press the central banker into avoiding unpleasant figures in the bank’s interim report next month. Garganas said that his talks with Simitis concerned «the strengthening of the Bank of Greece’s authority concerning protection of commercial banks’ customers.» He said also that he and Simitis had discussed the issuing of a special 2-euro coin to raise funds for some Olympic projects (see below). But a sign of the urgency of yesterday’s meetings was that Simitis and Christodoulakis canceled their own meeting and the finance minister held an unscheduled meeting with Garganas in his office. The aim of the talks was to align the indicators in the draft of the 2004 state budget proposal which Christodoulakis will present to the Cabinet on Thursday with those that will appear in the central bank’s interim report – which is to be made public in mid-October. The bank’s ascertainment that there is a 5.5 percent shortfall in accounts over the first eight months of the year, compared to a 2.6 percent shortfall over the same period last year, has worried the government. The shortfall is seen to be result of overspending by the government and the costs of Olympic projects. The government would like to avoid having the central bank appear to question the veracity of its figures concerning public finances as this would be disastrous in the runup to elections. The Eleftheros Typos newspaper reported on Sunday that Garganas had sent a letter to Simitis setting out the issues. Government Spokesman Christos Protopappas said, «There has been no such letter recently.» The central banker himself told reporters: «There is no letter.» Garganas avoided making any comment on the course of the economy. «As you know, the Bank of Greece, in accordance with its charter, is preparing an interim report on monetary developments and monetary policy which will soon be presented to Parliament, the prime minister and the Cabinet. Consequently, our opinion will be expressed in that report,» he said.

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