The Best of GRReporter
flag_bg flag_gr flag_gb

Greece wants a special investment fund

15 October 2012 / 18:10:22  GRReporter
2654 reads

Maria S. Topalova
    Greece wants to create a special investment fund to collect capital from European Union funds, international development organizations and private investors and for the capital collected to be invested in the Greek economy to bring profit for its participants. This was announced by the Minister for Development Kostis Hatzidakis, who spoke before an investment forum organized by the International Herald Tribune. For a few weeks now, the Greek government has been discussing how to do this with representatives of the French finance ministry, the German investment bank, the European Commission and the task force for Greece. "Currently, an unprecedented fiscal consolidation is taking place in Greece.  Both citizens and businesses are suffering damage to leave the crisis behind them. But along with this, there must be auxiliary measures because the success of Greece equals success for the euro zone," the Minister said.  
    One of these measures is for an investment fund to bring fresh money into the Greek market that has dried up as regards direct investments. The second measure is the preservation of European funds for Greece. Kostis Hatzidakis warned that there was the risk that the country’s funds could fall by 40% and from the 20 at present to drop to 12 billion euro. "It is not just because Greece is a country with huge problems, it needs a new Marshall Plan, not cuts of funds," he said.
    According to the Minister, many reforms are being implemented, but they go unnoticed both inside and outside Greece. "The country needs to be friendly to entrepreneurs, because they create jobs - whether we like it or not. That is why fast-track procedures for the registration of companies have been introduced. The cost per job in the period 2010-2013 has been reduced by 15%. The energy market has been liberalized as well as the profession of carriers. Cabotage for cruise ships has been entirely cancelled," he recalled.
    Deputy Minister of Finance Christos Staikouras pointed out the fact that Greece was going through an almost impossible fiscal consolidation along with a prolonged deep recession. "We lack an efficient system to manage the public finances, there are severe and significant tax crimes with which we are unable to cope, the competitiveness of Greek products has been falling for years and nothing has been done. There is a trend of severe austerity in many euro zone countries too. Italy, France, Spain are making great efforts to recover their economies, Cyprus and Slovenia are waiting in line. Discipline and savings should become part of the Greek vocabulary," the Deputy Minister was adamant.
    Christos Staikouras admitted that the lack of credibility in Greece was a big problem. He recalled the 89 measures, which were adopted in March and have not yet been implemented and which are now the conditions for the payment of the next tranche of the financial aid. "The country's treasury is at its minimum. The same goes for liquidity in the real economy," the financier warned. According to him, the first task of the government is to break this financial suffocation, the second one is to start making steps towards growth and the third - to create budget surpluses. "This is the only way to restore the faith in us," he concluded.
    Not so optimistic about the future of the Greek economy was Megan Greene, director for Europe at Roubini Global Economics, according to whom it seemed very probable that Antonis Samaras’ government would fall in 2013 and the country would leave the euro zone. "In addition to fiscal consolidation, Greece should make structural reforms as well. And I do not mean only privatization, but liberalization of the labour market and of the banking market in order to make it easier for foreigners to carry out transactions here, of closed professions," she said. She believes that if the official lenders of the country wrote off any part of the Greek debt, it would make the debt sustainable and serviceable, but it was a highly controversial idea that had a large number of opponents.
    "Eurobonds represent another way of dividing the Greek debt among the other members of the euro zone, but the other members do not appreciate this option and personally I think it will not come to that," Megan Green forecasted. In her opinion, economic growth is the only way to resolve the debt, but it cannot be achieved without currency devaluation. So, her recommendation is that Greece should return to its own currency as quickly as possible in order to secure economic growth. Megan Greene is not optimistic that Greece will receive the extension of fiscal consolidation because "more time means more money, and there is no one to give it to Greece at present."
    Joly Dixon, Special Adviser in the Task Force - Greece talked about some positive signs in the Greek government. "We are anticipating the privatization. There are many good properties, including Athens airport, which can be utilized. And they can be utilized in the right way. Not to obtain money from them, which is also important, but to start operating properly and to stir the economy, which is the most important goal," the adviser said. In his opinion, the next major goal is to improve tax administration. We see now a real will to effectively put the system into operation. "This government is starting to draw up an overall anti-corruption strategy and it is a very positive sign," Joly Dixon said.

Follow Maria S. Topalova on Twitter

Tags: Emergence from the crisisForeign debtAttracting investmentsRemaining in the euroGreek governmentStructural reforms
SUPPORT US!
GRReporter’s content is brought to you for free 7 days a week by a team of highly professional journalists, translators, photographers, operators, software developers, designers. If you like and follow our work, consider whether you could support us financially with an amount at your choice.
Subscription
You can support us only once as well.
blog comments powered by Disqus