Athens News Agency: News in English (AM), 97-11-13

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

NEWS IN ENGLISH

Athens, Greece, 13/11/1997 (ANA)

MAIN HEADLINES

• 1998 'convergence' budget tabled, aims for EMU by 2001
• Gov't pledges support for drachma's stability
• Bank of Greece intervenes in domestic money market
• Greece's net fiscal gains from transactions with the EU
• Simitis says Greece will fulfill convergence criteria
• Gov't says recent Holbrooke statements 'positive'
• Pangalos continues visit to Spain
• EDEK party leader Lyssarides holds talks in Athens
• Kaklamanis meets with Kinkel, Sussmut
• Transport agreement with Austria signed
• Greek stocks show signs of consolidation
• Greece to host conference on east European public administration
• EOT employees' union calls strike
• 270 mln dr lost in petrol smuggling scam
• Weather
• Foreign exchange

NEWS IN DETAIL

Greece plans to enter Economic and Monetary Union (EMU) by 2001, but will keep the drachma out of the exchange rate mechanism (ERM) before joining the European Union's single currency," National Economy and Finance Minister Yiannos Papantoniou said in a press conference yesterday.

Releasing the Greek government's 1998 budget, which was tabled in Parliament later in the day, Mr. Papantoniou said the stability of the drachma was the cornerstone of the government's economic policy, and that the budget aimed to achieve a deficit to gross domestic product ratio of 2.4 per cent in 1998. The ratio is sharply down on the 4.2 per cent forecast for 1997, and well below the 3.0 per cent needed to join EMU. "The government will not seek the participation of the drachma in ERM...(It) will keep the drachma's exchange rate stable against the Ecu and later the Euro until Jan. 1, 2001," he said.

Mr. Papantoniou described the budget as one of convergence and cutbacks in expenses.

Consumer price inflation, currently at 4.7 per cent, is projected to fall to 2.5 per cent by end-1998.

The budget also predicts a GDP growth of 3.7 per cent next year against 3.5 per cent in 1997. Unemployment is seen slipping to 9.2 per cent from 9.7 per cent. An innovation in the budget is the introduction of an inflation- linked tax scale of up to 5.7 per cent.

Revenues are projected to increase 11.2 per cent, and specifically tax revenues by 12.7 per cent. Expenses will increase by 4.9 per cent. Defence, education and health and social welfare are primed to receive increases above average, 7.1, 5.4, 7.4 per cent, respectively.

State coffers will be boosted by tax hikes on real estate transactions, cigarettes, capital gains, increased objective taxation criteria, an increase in tax on interest of state bonds from 7.5 to 10 per cent, a 0.3 per cent levy on stock exchange transactions and a new flexible tax on mobile phones determined by use.

Wages for civil servants will rise by 2.5 per cent.

Gov't pledges support for drachma's stability

National Economy and Finance Minister Yiannos Papantoniou sent a clear message yesterday saying that the government was prepared to go to great lengths to support the stability of the national currency.

"The policy of the stable drachma will not be abandoned. It will be pursued with even greater effectiveness after the consolidation of the independence of the Bank of Greece with a relevant bill later this month," he said.

"The future devaluation of the drachma is, therefore, a vain hope of speculators," he added.

"The government will not hesitate to increase even more the cost of its borrowing in order to make the drachma more attractive to investors, "he stressed.

He said that the decision not to join ERM for two years before EMU accession will allow Greece to defend the desirable parity of the drachma with a greater time leeway and margins for appropriate moves.

Bank of Greece intervenes in domestic money market

The Bank of Greece intervened in the domestic money market yesterday by significantly increasing liquidity through a new financial instrument.

The central bank supplied 130 billion drachmas in the interbank market through an auction of a four-month drachma/dollar swap, backed by long-term state bonds. The issue carried a fluctuating interest rate starting at 14.3 per cent. Bankers said that Mr. Papantoniou's statement that the drachma would not enter the European Rate Mechanism in 1999 was having a positive impact on the Greek currency.

The statement was interpreted as a sign that the government would not be forced to devalue the drachma or accelerate its slide because the currency would be supported by the government's convergence programme to meet Maastricht Treaty criteria.

In the domestic foreign exchange market the drachma was stable against most foreign currencies.

Greece's net fiscal gains from transactions with the EU

Greece's net fiscal gain from transactions with the EU is projected to increase 5 per cent this year, estimated by the budget to reach 1.478 trillion drachmas.

In 1998, inflows are projected at 2.078 trillion drachmas, outflows 437.6 drachmas, thus increasing the net gain by 7.6 per cent, which will thus top 1.590 trillion drachmas.

Total financing for agriculture from national and European sources in the budget is envisaged at 1.644 trillion drachmas. Of these, 900 billion will be EU funds. The budget says these funds will be used to continue efforts to deal with the structural weaknesses of the farm sector, which represents " an immediate and urgent" issue.

Simitis says Greece will fulfill convergence criteria

During yesterday's Cabinet meeting, which approved the 1998 budget, Prime Minister Costas Simitis called for broad party support, stressing that by the end of 1999 the country had to fulfill convergence criteria "so that before the elections of 2000 we will be able to say that we are a member of EMU."

The prime minister referred extensively to the drachma, saying that "our national currency ran the danger of devaluation," but that now this danger has passed.

"We shall unwaveringly defend the parity of the drachma," he said, adding that the government's resoluteness was already clear to world markets, where the subsidence of the pressure against the drachma is visible.

Mr. Simitis referred to the measures of social character accompanying the budget, such as subsidised training and job programmes for the unemployed aged under 27, estimated at about 200,000.

The prime minister also placed emphasis on the government's incomes policy, dismissing claims of compressed incomes, austerity and "policies leading wage-earners to despair." He presented figures showing that wage-earners' average real income had recorded a cumulative 12.5 per cent increase in the last three years, and stressed that in all the years between 1994 and 1997 wage increases had by far exceeded the increases in the country's productivity.

Gov't says recent Holbrooke statements 'positive'

The government views the visit by special US presidential envoy Richard Holbrooke to Nicosia as well as his statements there and later in Ankara as "positive", according to a statement by government spokesman Dimitris Reppas yesterday.

Mr. Reppas referred to the moves being made with regard to the Cyprus issue as "a most satisfactory development" and he expressed the hope that future developments would be as good.

The spokesman characterised Mr. Holbrooke's visit to Ankara as being within the framework of meetings with officials who were familiar with the Cyprus problem. He refused to interpret these contacts and added that until now there had been no discussion of a visit to Athens by the US envoy. With regard to the Turkish side's proposals for a federal solution in Cyprus, Mr. Reppas said:

"Turkey, as well as the Turkish Cypriots are insisting on their positions. I believe they are only harming themselves, since it is obvious that they are unwilling to contribute to finding a solution to the Cyprus problem."

The spokesman recalled that it was the Cypriot government that had first suggested the participation of Turkish Cypriots in EU accession negotiations. He said he had no doubt that this was feasible, even if the political problem had not been resolved.

Pangalos continues visit to Spain

Foreign Minister Theodoros Pangalos had talks on European Union enlargement, the situation in the Balkans and Turkey's role in the region with the president of the Spanish parliament's foreign affairs committee yesterday.

According to informed sources, discussion centred on Greece's views on Cyprus' accession to the EU, the tension created by Turkey in the region and the prospects for broader cooperation between Mediterranean states.

Later, Mr. Pangalos and the other members of the Greek delegation met with the president of the Spanish Senate Juan Ignacio Barrero.

The Spanish press focused on the visit by King Juan Carlos and Queen Sophia to Greece scheduled for May 1998, as well as the two countries' identity of views on the question of Spain joining the military wing of NATO.

EDEK party leader Lyssarides holds talks in Athens

The president of the Cypriot socialist EDEK party, Vassos Lyssarides, was received yesterday in Athens by National Defence Minister Akis Tsohatzopoulos, with talks focusing on the latest initiatives and future moves in the Cyprus issue.

After the meeting, Mr. Tsohatzopoulos underlined his concern as to whether a solution of the problem could essentially be based on objective facts, as well as the Cypriot peoples' needs and rights.

The defence minister described the US presidential emissary Richard Holbrooke's initiative as positive, and expressed the hope that it will lead to mutually acceptable solutions.

The Cypriot leader, on his part, described 1998 as a year of "open initiatives".

Mr. Lyssarides had earlier met Alternate Foreign Minister George Papandreou and the president of the Coalition of the Left and Progress Nikos Constantopoulos.

Kaklamanis meets with Kinkel, Sussmut

Parliament President Apostolos Kaklamanis,currently in Germany on a five- day official visit, met here yesterday with German Foreign Minister Klaus Kinkel, as well as Bundestag speaker Rita Sussmut.

According to sources, discussions between Mr. Kaklamanis and Mr. Kinkel were marked by an "intense" exchange of views, while the Greek Parliament president also brought up the issue of World War II reparations, something Bonn has rejected outright.

However, Mr. Kaklamanis told reporters his meeting with the German foreign minister was a "sincere and substantial discussion".

He added that "(Mr. Kinkel) listened carefully to our views on bilateral relations and how these can be influenced by issues on which the German side did not always have a clear position..."

Speaking on Greek-Turkish realtions, Mr. Kinkel said "Greece and Turkey should fix the base of their relations. This is the key to resolving problems in the region".

Transport agreement with Austria signed

A political agreement on transport issues was signed between Greece and Austria on the sidelines of the European Union conference of transport and environment ministers.

Transport Minister Tasos Mantelis and his Austrian counterpart Kaspar Hainhem signed the agreement.

Mutually acceptable and constructive solutions to facilitate both Greek transporters and Austrian concerns were also examined at the meeting.

Mr. Mantelis said that as a central European country, Austria has certain environmental concerns resulting from heavy transportation passing across the country to west Europe.

Greek stocks show signs of consolidation

Greek equities showed signs of stability with prices ending mixed to lower yesterday after several sessions on a free fall.

Trading was nervous with wide fluctuations in prices reflecting market worries over developments in the domestic money market and monetary policy.

The general index closed 0.29 percent lower at 1,373.80 points and the FTSE/ASE index lost 0.65 percent to end at 792.76 points.

Sector indices were mixed. Banks fell 0.31 percent, Insurance rose 0.85 percent, Leasing dropped 0.57 percent, Investment increased 1.28 percent, Construction ended 1.89 percent up, Industrials fell 0.31 percent, Miscellaneous jumped 3.05 percent and Ho lding fell 1.07 percent.

The parallel market index for small cap companies ended 0.85 percent lower. Turnover was 24.9 billion drachmas.

Broadly, decliners led advancers by 122 to 98 with another 16 issues unchanged.

Ermis, Sysware, Dane, Technodomiki and Halyps Cement scored the biggest percentage gains, while Koumbas, Nematemboriki and Sigalas suffered the heaviest losses.

National Bank of Greece ended at 25,500 drachmas, Ergobank at 13,950, Alpha Credit Bank at 15,750, Delta Dairy at 3,590, Titan Cement at 12,305, Intracom at 11,500 and Hellenic Telecommunications Organisation at 5, 200.

Greece to host conference on east European public administration

Greece is to host a conference backed by the United Nations on improving public administration in central and east European countries.

The conference, initiated by the ministry of interior, public administration and decentralisation, is to take place on November 17-20 in Thessaloniki.

Ministry and UN officials told a news conference that more than 100 delegates from 22 countries in central and eastern Europe and the Confederation of Independent States would attend the event.

Also to be represented at the conference are Black Sea Economic Cooperation, the World Bank and the European Union's executive Commission.

Prime Minister Costas Simitis and UN Deputy Secretary General Vladimir Petrovski will speak at a dinner to mark the start of the conference on November 17.

EOT employees' union calls strike

The Association of Greek Tourist Organisation (EOT) Employees yesterday called three-hour work stoppages for today and tomorrow (12-3 p.m.), as well as a 24-hour warning strike on Nov. 18 with a parallel gathering outside EOT headquarters.

The employees' union is protesting what it calls "the systematic neglect of EOT at an administrative and institutional level".

They also claimed omissions by EOT Secretary General Nikos Skoulas and Development Minister Vasso Papandreou.

The union is also reacting to the promotion of an amendment transferring funds and EOT employees to the provinces, as well as to a bill transforming EOT into a societe anonyme.

270 mln dr lost in petrol smuggling scam

An investigation into petroleum smuggling released yesterday by the Piraeus public prosecutor reveals that between 1993-1995, over 270 million drachmas in customs duties was lost through undeclared petroleum imports, in cases involving 43 customs officia ls and 11 petroleum companies.

According to prosecutor Ioannis Lambropoulos, 3,308,000 litres of petroleum were imported tax-free. Charges have been brought against customs officials and the heads of the companies involved.

WEATHER

FOREIGN EXCHANGE

(C.E.)

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