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Bankers insist on economic freedom, exports and investment opportunities for private investments

24 August 2011 / 12:08:43  GRReporter
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Minister of Finance Evangelos Venizelos:

You know that I follow your economic analysis and I would myself ask you to answer the same question. I will give you not a political, but a practical and responsible answer. We have no desire to deviate from the objectives. They are fully applicable to the budget deficit for 2011.

Of course, the main forecast, which is the base of the action plan, is not the original version of the budget – it is the final version of the austerity plan, and a fiscal adjustment in the amount of recession has been made. Our ultimate prognosis together with our partners (the Troika) at the end of the spring was that the recession would be 3.8%. Now, it is certain that it will be deeper and last longer. Therefore, it appears now that we should confront a more serious problem. Nevertheless, we believe that if all measures in both the revenue and expenditure sides are implemented we will be able to reach the goal.

We will discuss all this with the Troika next week; we will draw a common framework for action, because we are not two negotiating parties, we are partners in a project that concerns not only Greece but also the entire euro area and the International Monetary Fund.

Whatever we do, however, it will be agreed, reliable and part of the action strategy by 2014. You will not have any difficulties to answer this question on the roadshow.

The chairman of construction company ELLAKTOR Anastasios Kallitsantsis:

The issue of deviation from the amount of the expected recession is in direct relation to the urgent necessity of measures for economic development. This is something essential for the business and the economics. At the same time, we found that many of the announced measures are quite controversial and many of them have a negative effect on the positive economic growth.

I am speaking about the excise duty on natural gas and electricity. With this measure, major exporters will have to pay about 12% more energy costs, although there are constant talks to support exports.

The second problem is the time of implementation of these measures. Currently, all bilaterally (from the public and private sector) funded projects are frozen. We hear about constant meetings and discussions, but there are no solutions in the given time period. What do you expect us to tell investors about this? How should we support economic development with a tax system that hampers exports and procurement of secured financing, the implementation of which is frozen?

The Minister of Finance Evangelos Venizelos:

With regard to bilaterally funded projects, funds are provided but there are many other obstacles to their implementation. The Ministry of Finance initiated intensive talks with the companies, banks and relevant ministries to ratify the implementation of these contracts in parliament and the projects to complete.

As for the taxation of natural gas - in the development of this rapid and non-human attempt for fiscal consolidation since 2010, the need for coordination of finances has always dominated. We are obliged to implement many specific goals in the revenue budget. There is no doubt that decisions were taken that normally would have been different or at least would be subject to revision. We intend to consider all possible options in the new national tax system, but I would emphasize that what is approved will not be revoked.

Our goal is to have a new bill within two months that will correct the injustices in taxation, reconcile the problems without affecting the fiscal targets. I know very well the issue of taxation of industrial production and there could be a problem in the exports after the additional tax on natural gas used in the industry. We are ready to revise all these issues.

The Economist at Eurobank EFG Platonas Monokrousos:

Mr. Minister, the decisions of 21 July this year allowed the Greek government to take a breath, given that they significantly reduce the obligations of the state not only by 2014 but by 2020. That was something the market could not take. Moreover, the decisions suggest that the reduction of debt and the fulfillment of certain conditions will take it to more sustainable levels.

However, all forecasts show that in the best case, the debt ratio to GDP in 2020 will remain unsustainable. Therefore, I believe that the key to securing sustainable levels of external debt is the government to immediately turn to measures, which will support the positive economic growth. You reported recently that GDP would drop by more than 4.5%, which means that this year the recession will be deeper and the suggested positive economic growth of 0.6% for 2012 is not certain.

If we do not go back to positive economic growth soon we will lose all the confidence in resolving the crisis. What would you say about this turn of the economic growth?

Minister of Finance Evangelos Venizelos:

If we had not intervened, we could certainly turn to the dynamics of the external debt to the GDP. However, if we do not increase the GDP by a satisfactory level, the problem will continue to grow. The parameters that you know better than me on measuring the stability and dynamics of the external debt are many. The decision of 21 July enabled us to elongate the average duration of the payment of debt obligations compared to the average cost of its service. We, in turn, have committed, through the austerity plan, to begin to produce primary surpluses in order to change the curve of the external debt.

Tags: EconomyMarketsBankersRoadshowLondonAthens Stock ExchangeVenizelosGreeceCrisis
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