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For investors Greece is uncertain, unpredictable and volatile country

30 April 2010 / 15:04:34  GRReporter
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The problems faced by Greece are currently being discussed all over the world, but the most intense discussion is in Athens. While the Greek government is settling last details in the agreement with the International Monetary Fund and the European Commission, bankers, investors, academics and business people discuss various aspects of the difficult period faced by the country at the annual conference organized by the Economist magazine. 
     
"For investors Greece is currently unstable, unpredictable and volatile country and they avoid it by any means,” said Notis Mitarachi, an analyst at investment company Fidelio International and vice president of the Association of Greek bankers in the UK. He said the main problem facing investors is not founding a company, which is relatively easy, but making it work. Namely the problem is there and there are licenses, permits, restrictions. The analyst also pointed out that tax evasion is not a problem, the real problem facing investors is the often changes in the tax system. 

"Greece radiates uncertainty, impermanence, unpredictability. Every week there are changes and investors watch with suspicion to this practice. Every December they want the finance minister to come out and say: In the next 12 months I will do these and these changes and they will affect this and this way on your business and on your families," said Notis Mitarachi. This practice is more harmful in a competitive world as we have today, where every country tries to attract foreign investments. He reminded that several months ago investors knew the true situation of Greece, however, they invested in it, i.e. they credited trust to it. Now, we are observing the opposite phenomenon - despite reforms in the country, investors' confidence in it continues to fall. 

According to the analyst in order for investment in Greece to begin again, there should be a change in the psychological climate of the markets. "Investors never look in the past, they look forward to the future. Want to see a debt that is not more than 100 percent of GDP, and why not 80% of the GDP of Greece. But these figures are not even on the agenda in Athens today," he said. He also explained that the problem of Greece is not only the debt. The problem is also the interest rates, which currently is huge - 25 percent of the budget of the country and 5 percent of GDP. But the biggest problem remains the low competitiveness. 

Fidelity International representative explained that millions of people around the world entrust their money to investment funds and wait for their pensions. Therefore, these funds are very conservative and very cautious when choosing where to invest. "Greece is a country with a great future, but international markets need to understand this," said in conclusion Notis Mitarachi 

The crisis in Greece will continue for at least 10 years, provides Willem Buiter, chief economist of CityGroup. According to him exit from the eurozone can be reached only if the largest economies in it, such as Germany, consider that they can no longer pour capital into the bottomless holes of small economies. He stressed that the main problem for Greece is for it to be able to achieve and maintain financial solvency, which it has now lost. Financiers who participated in the conference of Economist magazine supported the view that the global financial crisis has not ended yet and that we are about to witness all its consequences. 

"It's like giving aspirin to a cancer patient that requires chemotherapy.” This is how Pantelis Dzordzakis, Chairman of the Board of Directors of the Federation of Greek telecommunications companies, gefined IMF's request to reduce salaries in the private sector. According to him the big problem for the competitiveness of the Greek economy are not high labor costs but the incapable state. "By reducing manpower costs, the cost of the product will slightly decrease, but mainly what makes it expensive is the expensive state," he said. 

Meanwhile, Moody's warned that it will lower the credit rating of Greece, which it had already lowered on April 22 from A3 to A2. Standard & Poor's already put placed investments in Greece in the “junk” category and rated them as BB+, and according to rating agency Fitch, the country is BBB-. 

Tags: Greece economy crisis IMF The Economist conference CitiGroup
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