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The recession in Greece will be at least 3 per cent in 2012

20 December 2011 / 17:12:54  GRReporter
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Greece's economy in 2012 will be formed as a consequence of the conditions under which the country will receive the new bailout package of 130 billion allocated by the International Monetary Fund, the European Central Bank and the European Commission, but surely, the recession will continue and it will be at least 3 per cent of GDP. This is the conclusion of the Foundation for Economic and Industrial Research, which today released its annual report.
    The Foundation provides for an increase in unemployment, which will reach 18.5 per cent next year. This year, it will be around 17.3 per cent. The annual report of the organization takes into account the effect of voluntary involvement of private creditors in the Greek debt haircut, which on the one hand will reduce the cost burden in the annual budget, but on the other, it will create enormous difficulties for insurance funds, which bought Greek government securities in the past.
    Meanwhile, the head of the Privatization Agency Costas Mitropoulos has stated that the ambitions of the supervisory Troika representatives for aggressive privatization in the coming months are not real because there is no investor interest. As it is known, Greece’s lenders insist that within 2012, it should privatize 28 companies worth over 10 billion euro. According to Costas Mitropoulos, privatization revenues will not exceed 2.2 per cent of GDP, i.e. they will vary between 4.6 and 4.7 billion euro.
     During the passing 2011, the Greek state has raised only 1.9 billion euro from privatization. The first weeks of 2012 will be more successful, because the privatization of the Athens Airport Eleftherios Venizelos and the state lottery will be completed then. The head of the Privatization Agency characterized the attitude of investors towards the Greek privatization programme as "rigid and extremely cautious." Banks are willing to lend only against a threefold mortgage. I.e. the bank lends one billion euro against mortgaged property for three billion euro.
    Luxury real estate in major urban centres, which were included in the programme at the last minute also have not attracted investor interest. Even worse is the situation with public companies listed on the Athens Stock Exchange. Costas Mitropoulos concludes that the delay of the privatization programme is not due to technical difficulties but rather to the present poor market configuration. However, the supervisory Troika representatives have a ready answer to this argument - the only solution for them is the Eureka plan inspired by Angela Merkel and developed by the consulting firm Roland Berger. It plans the formation of a fund from Greek state enterprises and property worth 150 billion euro, which is to be managed by the European Union.
    Today, the Greek government sold a new package of short-term T-Bills worth 1.3 billion euro to cover the most urgent needs. The interest rate reached 4.68 per cent - 0.05 per cent higher than the last auction held a few weeks ago. The T-Bills maturity expires after 13 weeks.

Tags: GreeceEconomic crisisRecessionDebtSupervisory TroikaPrivatizationPrivate creditors
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