The Best of GRReporter
flag_bg flag_gr flag_gb

Charles Dallara is back in Athens to complete the PSI. Greek businessmen are not certain about the outcome

18 January 2012 / 16:01:06  GRReporter
2733 reads

Victoria Mindova

The head of the Institute of International Finance Charles Dallara has returned to Athens to resume negotiations of creditors with the Greek government on the external debt cut (PSI). The time for negotiating the terms of the debt cut is almost over and bankers insist on completing the process before Greece requires a greater cut of its obligations to private investors. The level of interest rates on new bonds with a reduced nominal value and the period for repayment remain the points at issue. Dallara urged all stakeholders to resume the talks with a sense of goodwill and urgency so as to reach a quick solution and allow the eurozone to leave behind the feeling of uncertainty, which has gripped it recently.

As long as there is the feeling of uncertainty, there will be no foreign investments in the country, said the president of the Business Council for Sustainable Development at the Hellenic Federation of Enterprises Efthimios Vidalis. He spoke at the forum on Investment, Development and Unemployment, which brought together representatives from key sectors of the Greek economy. Vidalis stressed that there are three main issues that a foreign investor would ask before investing money in the Greek economy and they are:  1. What will be the settlement currency for the transactions in the country? 2. What will be the type of the banking system in the country -private or public? 3. What taxes will be paid? The answers to the first two questions will come immediately after the negotiations on the haircut of the debt and after Greece signs the second bailout agreement. In this case, Greece will remain in the eurozone and it will be announced whether it will be necessary to nationalize the banking system and to what extent. Of course, if one of the two conditions is not met, the new drachma will come into force and the banking system will surely need to rely on state funds for some time before starting to operate alone.

"At one point, uncertainties in Greece will be solved in one way or another, either by ourselves or by external factors, so as to return to growth. The question is where this process will begin from," said the industrialist. He stressed that the most important task of the Greek government is to tackle structural reforms seriously, as Greece has delayed them nearly dramatically.

Vidalis presented recent data from the World Bank’s ranking on Doing Business, according to which Greece occupies the hundredth position among one hundred and eighty countries, because of its administrative barriers and cumbersome bureaucracy. He compared it with Turkey and Bulgaria, which  rank 71 and 59 respectively because they have introduced basic reforms in the administration that facilitate entrepreneurship in the country. As for starting a business, the country is ranked 135th, in the property transfer category it is 150th and in paying taxes it is 90th. The country is in the worst position as far as protecting investors is concerned – it is ranked 155th.

In particular, the measures that will help Greece improve its economic model include a reduction of tghe public sector, a predictable and stable tax system is also necessary. The entrepreneur insists that it is important to establish an effective banking system that makes decisions based on sustainable economic criteria and to intensify privatization. "Privatization should not be perceived just as benefits in the statement of revenue. It should rather be seen as a reduction of public sector."

The same opinion is shared by the Research Associate to the Foundation for Economic and Industrial Research Nikos Zonzilos. He has found that bureaucracy, corruption in the public sector, protectionism for some occupations and lack of innovation are the causes for the low competitiveness of Greek production and not the level of wages, which has fallen into the eye of the supervisory Troika recently. "In an economy with barriers and restrictions, such as the Greek one with a large supply of products and services, reduction of wages will increase unemployment and decrease consumption, because the two main factors of economic development - production and demand - will drop." In this sense, the economist from the Foundation for Economic and Industrial Research believes that the forthcoming reduction of wages in the private sector will deepen the recession and will not improve competitiveness.

The president of the Association of Tourism Enterprises Andreas Andreadis was clear that Greece should complete the long liberalization of the domestic market. He pointed out that the average cost of transport in Greece remains relatively high compared to other peripheral countries of the European south, which seriously hinders the development and improvement of tourist services in the country. Andreadis strongly condemned the lack of initiative in the government to deal with topical issues to improve the conditions in which tourism develops.

"The government way of operation is evident in downtown Athens too. Over 300 million euro are not used to manage the problems with illegal immigration, asylum committees do not work, the hooded guys destroy everything and this is the face of the capital seen by Europe." An important change that has remained as just a promise without being implemented is the reform of the visa regime for businessmen from countries outside the European Union and from North America. "There is a slight improvement in the process of issuing visas to citizens of Russia, but this is not enough." Andreadis said that the country is not yet granting a permanent visa for citizens who have purchased expensive properties in Greece. "There is no way to attract direct private investment if we do not improve the structure of the state and simplify its operation."

Tags: EconomyMarketsPSIBanksGreeceDefaultCharles DallaraGreek foreign debt cut
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