NEWS

On the path of reform, with steps taken ‘by consensus, not surprise’

Prime Minister Costas Karamanlis emphasized his desire to «follow the path of reform» in his speech at the 69th International Trade Fair in Thessaloniki. Specifying the type of policies he would implement, he pointed out that reforms would be made «with courage and not hesitancy, by consensus and not by surprise, through dialogue not conflict, and mildly rather than harshly.» He said the government would be consistent in carrying out an absolutely realistic program and was committed to implementing it within its four-year term of office. In the past six months, he explained, the government had dealt with issues of major national concern, completed all the Olympic Games projects within a very tight time frame, and had dealt with all outstanding matters. The new era has inherited serious problems and great challenges, said the premier, who described social and economic reality as being problematic. He believes Greece is facing acute fiscal problems. The 2003 statistics for the public deficit were artificial, as were those for the previous year. The real deficit was far greater than what was officially presented, and, according to Karamanlis, is 4.6 percent of GDP, against the official figure of 1.7 percent. In other words, the real deficit is almost three times as high. The real deficit And the 2004 figures were even worse, he explained. A large number of Olympic, social and other expenses were not recorded in the budget. The real deficit was not apparent. It had been projected at around 1.2 percent of GDP but in fact will be 5.3 percent. Public debt, which showed a decrease on paper, had in fact skyrocketed. Social policies were implemented by means of loans. Defense expenditures did not appear in the budget. Change imperative Secret debts were incurred one after another until the public debt exceeded the direst predictions. At 184 billion euros, it amounts to 112 percent of GDP. That means a debt of 50,000 euros (or 17 million drachmas) per family. This has made change imperative, said Karamanlis. Reform is needed in public administration, the public sector in general and in economic structures. The first prong of the government’s strategy is the transition to a responsible State with an executive, regulatory and monitoring role, a State that is close to investors, farmers, workers and people in need. The second prong concerns the implementation of a new economic and development policy. There will be a new institutional and organization framework for state procurements aimed at boosting healthy competition, saving money and getting more enterprises to participate. The so-called «mathematical formula» of fixing tenders is to be abolished outright and the system of the lowest bidder reintroduced. New legislation is being drafted for armed forces procurements, and work has begun on renegotiating large Defense Ministry contracts so as to retrieve sums of state-owned money. A new series of privatizations will help speed up development and increase state revenues. Karamanlis said his government was working on a new privatization plan that will bring in about 1.5 billion euros in state revenues next year. The government will carefully choose the time, procedures and methods so as to maximize the benefit for the economy and avoid unwanted side effects. This entails highlighting the value of each company before privatizing it. All kinds of methods will be used, depending on each case, explained the premier. These include increased participation by the private sector in basic infrastructure projects (ports, airports and roads), listing the Postal Savings Bank on the stock exchange, and a new attempt to privatize Olympic Airlines through close contact with the European Commission. In addition to the 2 billion euros (spent on unsuccessful reform programs to date), the group formed after the creation of Olympic Airlines now has debts of 1 billion euros.