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Ten challenges for the Greek economy to recover defined the mission of the International Monetary Fund, the European Central Bank and the European Commission. Their mplementation will guarantee the payment of the fourth financial support tranche to Greece. Under the Memorandum of financial support Greece should receive the fourth tranche of 15 billion euros in March 2011. The third tranche of 9 billion euros has been confirmed finally and it is expected to be paid within a month and a half. Its payment was hanging by a thread after it became clear that the Greek government, regardless of the stringent economic measures taken this year, failed to implement its revenue budget.

The Minister of Finance George Papakonstantinou presented a detailed plan for the reorganization of the Greek government finances in 2011 and only its strict implementation will ensure the support of international partners in the future. The PASOK government made a list of 10 challenges (others would say insurmountable problems to date) in the process of fiscal consolidation, the solution of which will give Greece a chance to regain confidence in the future.

Public expenditure management and control are the first in the list of the Ministry of Finance, which is trying to turn the Greek public administration into an effective and financially adequate system of state institutions under the supervision of the Troika – the International Monetary Fund, the European Central Bank and the European Commission. A tight control over the budget implementation is necessary and medium-term economic framework for action is needed to be built by June 2011. It will not contain all the detailed measures to be taken for the period 2012-2014 but it will outline the guidelines for cost reduction, revenue increase and economic growth recovery.

"The 2011 measures focus on real problems in the system - the huge deficits of state enterprises, frivolous spending in health care sector, serious problems with tax unfairness, the big cost issue and the poor public sector management in general," said the Minister of Finance Giorgos Papakonstantinou. Solving these problems is the basis for overcoming the 10 challenges for fiscal consolidation not only the next year but in the long run.

The serious problem with tax evasion in Greece will finally become a priority in the fight to restore economic stability. Two laws will be voted by January 2011 that will give more freedom to the tax authorities to act more freely where serious breaches are suspected. The first step in this direction is the restructuring of the Ministry of Finance as it is expected 100 regional tax offices to be cut or merge with others. The second is the complete reorganization of tax administration, which will be announced early next year.

The Troika and the Minister of Finance George Papakonstantinou completely agreed that 2011 would be extremely difficult although the budget deficit should be reduced by only two points from 9.4% of GDP at the end of this year to 7.4% of GDP at the end of 2011.

An important step for implementing the program for deficit reduction is the costs cut of unprofitable public enterprises that have been operating at a loss for years and have accumulated billions of euros in debts. The Greek government is obliged to prepare a comprehensive proposal for the closure and merger of public entities in the first quarter of 2011, and to review the overall framework of corporate management in public companies. The expected benefits of cost cuts in public companies are 800 million euros only for the next year. The first in the list is the state railway company with partial privatization, public transport in big cities with travel routes optimization and closing or tightening of the budgets of all other state enterprises.

Fourth in the George Papandreou’s government list on "What should I do next year to get money?" is the reform in the public administration management. One of the important tasks here is the change in the civil servants appointing system. The Financial Minister announced that due to the severe economic situation and the still more intrusive public administration appointments in public sector the next three years will be made on the principle one to five. This means that for every five retirees only one new employee will be assigned, approved by the Council for recruitment in the public sector (ASEP). About 40,000 retired are planned for 2011 which means that not more than eight thousand new employees will be assigned.
 
The public administration reform includes the introduction of a unified payment system for salaries, which will finally bring equality in the salaries of employees of the same rank in different ministries. A working group will be formed in the middle of the year to improve the education system as well as two studies will be developed in collaboration with the Organization for Economic Cooperation and Development - one for the overall efficiency of public administration and the second on the effectiveness of government social programs.

Тhe Socialist government has assumed the responsibility for making a new legal framework for the supply of medicines in the health care system by March 2011 and to introduce electronic prescribing, which is expected to save taxpayers billions of euros. The Financial Minister George Papakonstantinou appointed in the middle of 2010 two auditors from the largest private auditing companies in the world in the large hospitals in the country. Their task was to inspect the books and the financial performance of these healthcare institutions, giving a clearer picture of why public hospitals in Greece are so expensive for the state while they do not offer the appropriate services. Following the conclusions of the financial advisors, Papakonstantinou plans to introduce a cross-check on the cost of doing business in the health system, a new framework for public procurement in hospitals and a new policy for state subsidized medicines.
 
Reform of labour relations in the private sector is the sixth challenge in line Papakonstantinou presented. The biggest fear of trade unions in Greece is to repeal the national collective agreement which regulates minimum wages, allowances and salary increases according to the service length in the private sector. The government promised that the collective agreement will not be canceled, nor the minimum wage will be repealed, which this year is determined to be 740 euros. Nevertheless, it called for greater flexibility of wages to the difficult economic conditions the local business is experiencing today.

Due to the economic situation, Citibank announced that it will reduce the number of its branches across the country from 72 to 31 in 2011. Citibank’s target in the beginning of the decade was to open a total of 100 branches throughout the country. Now these goals have changed because of the shrinking market. The commercial bank will not resort to layoffs, but it has prepared a program for voluntary staff release.

"It is very simple - companies where the salary is not in line with productivity will close," cut Papakonstantinou, answering a journalist's question what would happen to collective labour agreements. Improving competitiveness is largely a structural problem that is associated with the ability to change the orientation of the Greek economy, the Minister explained. "That is why we talk so much about a new development model, but this is due to the difference in unit labor costs in Greece compared to those of our competitors (the other countries of the Eurozone-author’s note). The most important component in the unit labor costs is the cost of salaries," said Papakonstantinou. Salaries should correspond to productivity and this will improve competitiveness of the national economy in comparison with the other countries in the union.

As for the liberalization of the labour market, the government has undertaken to reform the system of collective labour agreements in the private sector in cooperation with the social partners by the end of 2010. In some sectors, the government will leave more freedom to sole agreements than to collective agreements. Only on condition that certain rules are followed that protect basic rights of employees. The liberalization of closed professions will continue in 2011and a law on the liberalization of closed professions will be voted by March next year.  

The eighth challenge to the Greek government is to improve the business climate and create the foundations for economic growth in coming years. This is more like Everest now as the Greek government had to increase taxes and excises duties three times in 2010. Instead of thereby increasing the revenue to the state treasury this accelerated the recession and the Greek enterprises began to fail one after another or moved out to more business friendly neighbouring countries. Papakonstantinou promised that by the end of this year a law will be enacted to simplify the process of issuing permits for development of business in the country, the 30 biggest obstacles to business will be removed (!?) and programs for development of innovation, tourism and new technologies will be prepared.
 
As for the financial sector, George Papakonstantinou stressed the importance of the Fund for financial stability, which was founded in August 2010 and will avail cash to support the banking system in 2011 if necessary. The Fund avails 1.5 billion euros in the last quarter of 2010 and this amount will be increased the next year. After the Troika and the European Competition Commission approval, Agricultural Bank will be restructured by the end of the year and the deposits and loans fund will receive state aid by March 2011, which is not yet clear in what form it will be provided .

"We are committed to do something unheard of until now in Greece - finally an inventory of public property will be made and the results of the inventory will be present by the middle of 2011," said the Financial Minister with pride. The tenth challenge for the Greek government for the next year is the utilization of public property and the operation of the privatization program. The objectives here are to collect around seven billion euros by the end of 2013 and one billion even to the end of 2011. " Detailed plan for public assets utilization will be submitted by the end of the year," promised Papakonstantinou, who had provided a similar project a year earlier that had to be ready by October 2010.