Athens News Agency: News in English (PM), 97-09-07

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From: The Athens News Agency at <http://www.ana.gr>

NEWS IN ENGLISH

Athens, Greece, 07/09/1997 (ANA)

MAIN HEADLINES

• Simitis' annual economic policy speech in Thessaloniki
• Plans move ahead for the 2004 Olympiad in Athens
• Minister reassures northern Greeks
• Weather
• Foreign Exchange

NEWS IN DETAIL

Prime Minister Costas Simitis warned on Saturday that a failure to meet economic targets set for 1998 and 1999 would jeopardise Greece's bid to join the European Union's mainstream.

"Remaining countries in the EU are moving ahead. The repercussions of a delay beyond 1999 would be highly dangerous, and we are not going to play with the country's fate," Mr. Simitis said in his annual economic policy speech at Thessaloniki international trade fair.

Consumer price inflation, the bugbear of the economy, had to drop below three percent in 1998, sinking to two percent a year later, Mr. Simitis said in a written copy of his speech released to reporters.

Although the socialist government had managed to cut inflation to roughly 5.5 percent from 8.5 percent a year ago, tight fiscal and monetary policies had to stay in place in order to drive it down further, Mr. Simitis said.

"Inflation is currently a critical problem for economic policy. Its containment to two percent in 1999 requires hard work and an appreciation of just how crucial the matter is. Persistence is needed in applying our policy," he said.

Also slated to fall under the government's 1994 plan to align with other EU countries is the fiscal deficit, which has to drop below three percent of gross domestic product (GDP) in 1998. The cut would represent eight percentage points against 2.6 points for other countries.

"1998 is an especially critical turning point ... We have before us difficult and pressing targets that we have to achieve simultaneously in two years at the most," Mr. Simitis said.

The rate of GDP growth, estimated at 3.5 percent for 1997, is forecast to rise to four percent in 1998, according to government officials.

In addition, average real wages rose in 1994-1997 by 2.7 percent, or the same as the average rate of GDP growth in the same period. In 1997 real wages increased by 3.5 percent, the same as GDP growth.

"The improvement in economic fundamentals we are achieving may be unprecedented for Greece. It does not, however, allow room for complacency, or any halt in our endeavour.

"Our targets are imperative, and our margin for deviation almost zero," Mr. Simitis said.

The prime minister urged employers and labour unions to assume their responsibilities and to consider the significant effects of collective labour agreements, "which for the government and society are a respected institution".

He called for consensus on a "Social Agreement" to ensure the achievement of the major goals set by "us, as a society in general, not just as a government". These were fiscal policy, inflation and development, goals which he stressed would not be influenced by any immediate political cost.

Containing inflation would not, he said, have a major effect on other policy goals. Prices policy for public utilities would serve the government's overall anti-inflationary goals. He called on all public utility managements to economise and improve productivity.

"The government is determined to intensify its own efforts to achieve success... Monetary union, improving the economy and infrastructure projects are opening up new opportunities for more employment, higher incomes for all, and a better standard of living."

Mr. Simitis called on businesses to take more initiatives and risks than in the past.

"Today profits are much more satisfactory that they have been in the past few years. However, business investment has not increased accordingly. If businesses can't abandon the mentality of short-term planning, then we will lose ground as a country," he warned.

Mr. Simitis said the government planned to bring about structural reforms by increasing competitiveness through investments, creating better conditions to tackle inflation, ensuring jobs by investing in infrastructure and manpower, and by wide-ranging adminstrative reforms.

"No serious political intervention has any chance of success as long as adminstration is anachronistic and bureaucratic," he said.

Efforts would be made to attract new strategic investments from abroad, exploit technological innovations and pursue cooperation in the Balkans, the rest of Europe and Black Sea states.

Simitis warned against obstacles to competitiveness from isolated reactions that could endanger investments from abroad and jeopardise job creation.

"For example, opposition to a major gold mining investment in Halkidiki (carried out by TVX Gold of Canada) has compromised Greece and will no doubt have negative repercussions on society as a whole."

Also important, he added, were a more effective use of investment resources including a review of the Community Support Framework, and reform of an existing development law to spread the burden of fiscal revitalisation more evenly.

Thrace, the Aegean and other outlying regions would continue to be given priority.

Meanwhile workers needed to feel their jobs were secure.

"They need to feel that they are not at risk of losing their jobs at any moment. Particularly for young people, effective ways must be found to fight unemployment."

Current educational reforms were expected to help equip youth to face the future. The 1997 budget contained an increase in funds earmarked for education, up 18.4% on 1996.

The prime minister blasted local government officials who have strongly opposed a plan to overhaul the country's administrative districts, saying vested interests could wreck the government's plan to decentralise.

"The Ioannis Kapodistrias plan (to merge municipalities and communities) has met with resistance from the local power establishment, which prefers to sacrifice the future of local communities to the altar of personal ambition," he said.

The bill, masterminded by Interior, Public Administration and Decentralisation Minister Alekos Papadopoulos, is expected to go to parliament next month.

"This programme is aimed at the villager, the farmer and the livestock breeder," Mr. Simitis said.

The aim of the scheme was to break the stranglehold of central administration and give the regions an active role in decision-making, Simitis said.

No new red tape would be created, and village residents would retain their tax and insurance breaks.

Plans move ahead for the 2004 Olympiad in Athens

Athens Mayor Dimitris Avramopoulos yesterday asked Gianna Angelopoulos- Daskalaki, who led the Athens 2004 bid committee, to chair Athens' Olympic Games Organising Committee.

Speaking in Lausanne after Friday night's announcement by the International Olympic Committee that Athens would host the 2004 Olympiad, Avramopoulos told journalists:

"I believe Mrs. Angelopoulos deserves to continue with this effort and today I officially propose that she herself assumes the important post of president of the organising committee for the 2004 Olympic Games."

Meanwhile, Prime Minister Costas Simitis and the country's Olympics delegation to Lausanne will hold a news conference at the Zappion Hall on Sunday to field questions on Athens' successful bid to host the 2004 Games.

The delegation is due to arrive in the capital from the Swiss city at 1800- 1830 local time, shortly before the news conference is scheduled to start at around 1900 local time.

An open celebration for the public will be held at Zappion later in the evening. Singers George Dalaras and Haris Alexiou will perform.

Minister reassures northern Greeks

National Economy Minister Yannos Papantoniou reassured business circles in Thessaloniki today that the 2004 Olympic Games to be held in Athens would not be at the expense of major projects scheduled for northern Greece.

The International Olympic Committee last night in Lausanne voted Athens as the city which will stage the 2004 Olympiad.

"This does not in any way change the great emphasis and priority the government has put on northern Greece and Thessaloniki," said the minister, speaking at the general assembly of the Central Union of Chambers of Commerce and Industry.

In particular, priority was being given to Macedonia, Thrace and Epirus with regard to projects to be carried out within the framework of the third Community Support Framework, he said.

Referring to the need for more competitiveness and productivity, Mr. Papantoniou called on Greek business owners to proceed with mergers, and "to put aside Greek egotism".

He predicted that interest rates would drop to around seven to eight percent over the next two years.

"The idea of small investments," he said, "is over for our neighbouring countries. It is now time for major investments in infrastructure projects such as transport, telecommunications and energy."

The national economy ministry, he said, was preparing a new "model" for economic transactions in the Balkans based on an orientation towards consortiums, whether between Greek businesses or with foreign firms.

He called for the support of the country's banks and other financial institutions, saying that within the next few months the ministry would be stepping up cooperation and coordination with banks.

WEATHER

FOREIGN EXCHANGE

(Y.B.)

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