Alternate Minister of Finance Christos Staikouras – Interview with “21st Century Business...

Alternate Minister of Finance Christos Staikouras – Interview with “21st Century Business Herald” – “Greece is the closest European country to China and can be a business hub and gateway for Chinese investors that want to enter the Euro Area”

1. A total of EUR 31 billion of aid payment has been detained for a few months and you appealed to European partners to recognize Greece’s “limits” on solving the debt problem; what are these “limits” and where do they refer to? Do you think such urgent situation will emerge again in future?

According to the disbursement schedule of the Economic Adjustment Program, Greece should have received a disbursement of EUR 31.2 billion until the end of the second quarter of 2012 and two more disbursements amounting to EUR 13.2 billion during the next two quarters of the year.

However, the agreed loan tranches of the Support Mechanism have been ceased since June due to the worsening of the macroeconomic environment, delays in the implementation of the Program and the prolonged electoral period.

After the formation of the new Government, the negotiation process resumed to complete the review of the Program and restore the agreed funding flows in the context of the Support Mechanism.

The review procedure is now completed and Greece has already adopted all the requested prior actions and the fiscal adjustment measures to achieve a primary surplus in 2013 and thereafter.

It is also important to emphasize that Greece has so far undertaken the largest ever fiscal adjustment effort in the EU.

This new sustainable fiscal adjustment effort contributes significantly to the confrontation of the public debt problem.

To illustrate, consider that over the next four years debt, in absolute terms, it is estimated to increase as much as it has been increasing on an annual basis in the recent past.

Now, the decisions lie on the side of our partners.

Decisions on the release of the agreed disbursements, on the funding gap (caused by the two year extension of the Program) and on the sustainability of public debt.

I hope these crucial decisions will be taken as soon as possible, so that such an urgent situation will not come up again in the future.

2. Previously the privatization process was repeatedly postponed due to various reasons: how do you ensure that the time schedule of the privatization progress will be upheld, especially after the adoption of the new round of privatizations last October.

It is a fact that the privatization program, as well as major structural reforms for the enhancement of the business environment, was not high in the agenda of previous governments during the last three years.

In contrast, the new Government believes that a large scale privatization program is an important policy instrument for the reduction of the public debt as well as the improvement of the investment environment.

Thus, during the last months, we have already promoted the legal and institutional enhancement of the Privatization Fund and have transferred to it public sector assets that are included in the privatization process.

Furthermore, it is worth mentioning that calls of interest have already taken place with success and satisfactory participation.

The messages from the international investment markets are supportive.

3. In the eyes of outsiders, the bailout plan developed at the request of the troika seems to be mainly focusing on austerity; it also seems to lack support in terms of the much needed economic recovery and development; what measures will you take to make-up for this?

It is true that the fiscal adjustment measures that we have already been adopted, are a prerequisite for the continuation of the Program, but this will ultimately lead to the finalization of the banking sector’s recapitalization plan so as to allow for the strengthening of the liquidity of the real economy.

This would allow the Government to effectively implement its strategic plan to get the economy “out of the woods” and speed up the recovery.

This plan is based on the philosophy of pairing fiscal adjustment with economic growth in order to enable the economy to escape from the vicious circle of deficits and recession.

In this respect, we are concentrating on the implementation of policies that focus on reversing the recession and increasing the liquidity of the economy.

More particularly, we are implementing specific and necessary reforms to reduce the barriers to investment and to enhance competition in product and service markets.

Additionally, we are promoting initiatives and tools to increase liquidity in small and medium sized enterprises and to every dimension of the real economy.

4. Greece’s debt sustainability has been a market concern at all times; as indicated in the latest report from Goldman Sachs, in order to enable Greece’s debt to reach the target level set by IMF – 120% of GDP by 2020 – it is imperative that Greece must do additional write-downs of more than EUR 80 billion. How will you respond to external speculation and worries regarding Greece’s funding gap?

I do not endorse the estimations of the financial institution that you are mentioning.

Moreover, I would not like to reveal any aspects of the ongoing discussions regarding the funding gap after the extension of the Program.

We are searching for a solution that would definitively ensure the settlement of the debt sustainability issue and, in parallel  will not create a difficult situation for our partners within their countries regarding the parliamentary decision-making processes.

I am conservatively optimistic that in a few days a clear solution on the sustainability of public debt will be adopted, thus further weakening any attempts for speculation.

5. Successive Greek governments have been criticized for being ineffective against tax evasion; as you have mentioned before, tackling this problem will be your first priority. What are your current plans policies on this issue?

In Greece, as well as in many other countries, tax evasion is widespread.

The previous governments attempted to deal with it, unfortunately without considerable success.

To be honest, I am not aware of any country that has fully and effectively dealt with tax evasion.

So, it is a field where we have hard work to do so as to achieve significant results.

The specific policies needed to tackle tax evasion will be included in the forthcoming tax reform law during the next weeks.

Our aim is to simplify the procedures and improve the efficiency of tax administration, which will allow us to deal with this issue.

We have already demonstrated our philosophy of zero tolerance to tax evasion and will continue our effort towards this direction.

6. There has been a total of USD 420 billion of global investment inflows into the European Union last year with only 1.8 billion pouring into Greece: do you think Greece could change this trend of global investment flows in the short term? Are there any national strategic targets set by Greek government to attract foreign investment?

It is true that Greece has not been able so far to take advantage of global investment inflows into the EU.

That was due to specific rigidities of the economy.

This is not the case anymore.

Greece is among the 10 best reformers in the world for 2011, as recently published in the Doing Business report of the World Bank.

As I have mentioned before, we have already adopted and implemented a wide range of structural reforms to modernize our economy.

We are continuing this effort with measures to restore public finances and improve competitiveness.

These reforms are providing for the improvement of both the business climate and the investment environment.

The Greek government has a well planned strategy to attract foreign investments.

This strategy is based on the unique competitive advantages of specific sectors of the Greek economy that are still very attractive despite the crisis.

In this framework, the Greek government is implementing the largest declared in the world privatization program, which has already attracted the real interest of foreign investors.

Opportunities do exist in fields such as tourism and real estate, energy, infrastructure and transportation, technology, agriculture, waste management and in several export-oriented manufacturing subsectors.

7. In order to convince Chinese entrepreneurs that it is worth investing in Greece, which kind of message would you like to convey during the forthcoming investment forum to be held in Shanghai on November 30th?

Greece welcomes investors from China.

Greece is the closest European country to China and can be a business hub and gateway for Chinese investors that want to enter the Euro area.

Greece is a Euro area country strategically located at the crossroads of three continents: Europe, Asia and Africa, with a highly qualified human capital that possesses all these characteristics to attract investments from China.

Therefore, it does not come as a surprise that Chinese Cosco, who is currently running Pier II and will construct Pier III of Piraeus Port, is among the most successful foreign investments in Greece.

According to data recently posted,Piraeus port will be in 2012 among the 10 busiest ports in Europe in terms of containers movement.

Recently announced business deal between Cosco, Hewlett-Packard and TRAINOSE will further increase the container movement by almost 50%.

Furthermore, Fosun International acquired almost 14% of international Greek Folli-Follie and also participated in tender for the privatization of Greek Gaming Organization (OPAP).

These important deals are signing the way forward for other Chinese investors to explore many business opportunities inGreece.

Now is the right time to do it.

8. Recently Mme Merkel said that the European debt crisis will continue for at least five years: do you think this statement is too optimistic or too pessimistic? In your opinion when will the Greek economy leave behind the “nightmare” and vicious cycle of the current crisis?

Greece is facing the 5th year of recession.

It is the most severe crisis since the 2nd World War that the country is coming up with.

But we believe that by the end of 2013 we will see positive signs in terms of GDP growth, as international institutions have already mentioned.

But we still have way to go, despite the positive signs.

Therefore, it is necessary to continue the fiscal consolidation effort and ultimately achieve the national target.

That is, to achieve a primary surplus in 2013.

In this way Greece will take a deep breath.

The funding of basic state functions will be done by our own resources, while we will get critical degrees of freedom.

We are reaching the end of the tunnel.

Personally, I am cautiously optimistic that we will make it.

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