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Athens News Agency: News in English (AM), 98-10-01

Athens News Agency: News in English Directory - Previous Article - Next Article

From: The Athens News Agency at <>


Athens, Greece, 01/10/1998 (ANA)


  • Commission recommendation for Greece's convergence programme
  • Gov't presents bill to overhaul Athens,Piraeus urban transport
  • Gov't welcomes country's biggest ever tourism investment
  • Two foreign firms bid for Hellenic Duty Free Shops
  • Greek stocks slump on decline by European markets, sale tender
  • Simitis speaks with newly appointed Albanian PM Majko
  • George Papandreou cancels trip to Belgrade
  • Reduced winter prices on passenger ferries
  • Weather
  • Foreign exchange


Commission recommendation for Greece's convergence programme

The European Commission yesterday endorsed the recommendation it will submit to the Council of EU economy and finance ministers (ECOFIN) regarding Greece's all-important convergence programme.

It is the first specific implementation of the new processes anticipated by the fiscal stability and development agreement on the su-pervision of the economic and fiscal policies of member-states that will not join the euro zone as of Jan. 1, 1999.

The primary target of the country's convergence programme is adherence by Greece to terms and conditions that will permit it to participate fully in Economic and Monetary Union (EMU) and in the common euro currency as of 2001.

The European Commission ascertains that this programme is in accordance with the general economic policy guidelines, ratified at the Cardiff summit last June. The European Commission also said that what is important is for inflation to decrease to the planned level of 2.5 per cent in 1999, with subsequent price stability to be maintained.

The Greek government must decrease public deficits to 2.4 per cent of GDP in 1998 and then reduce them progressively even further in the years to come in order to reach 0.8 per cent in 2001.

The public debt will have to decrease from 108.6 of GDP in 1998 to 99.8 per cent in 2001.

The European Commission also finds that the Greek programme sets out progress scheduled by the government towards convergence criteria and more specifically inflation, fiscal issues, longterm interest rates and monetary stability. The participation of each country in the euro zone depends on respect for these criteria. The Greek convergence programme covers the 1998- 2001 period.

The main conclusions reached by the Commission after examining the Greek convergence programme are that the programme reflects the target set by the government for respect for the necessary terms and conditions which will allow Greece to join the euro as of Jan. 1, 2001, and that it is mostly adjusted to the requirements of the "Stability Pact" on the condition, of course, that relevant measures of a fiscal and structural nature announced by the government in 1998 for this purpose will be fully implemented.

The Commission also urges the Greek government to honour commitments in terms of fiscal measures, as well as the implementation of structural reforms which it had announced itself when it included the drachma in the exchange rate mechanism on March 16, 1998.

The Greek programme is based on an ambitious prediction of growth rates which does not lack realism, says the Commission.

It further notes that:

-The growth of salaries at slow rates and the strengthening of fiscal discipline will play a decisive role in the effort to achieve targets set by the convergence programme for a decrease in inflation.

From this aspect, implementation of the 1998 budget appears to be developing in accordance with predictions. In addition, the Greek authorities announced, after submitting the convergence programme to the Commission, new and more ambitious targets in the fiscal sector for 1999 (deficits amounting to 1.7 per cent of GDP instead of 2.1 per cent).

-For the success of the Greek convergence programme an increase in public investments is necessary which will be funded through a decrease in current expenditures without, however, overturning the downward trend of the total deficit.

-The percentage of public debt in relation to GDP decreased since 1994 but more slowly than was allowed by the decrease in deficits during the same period. The programme aims at securing a primary surplus in the region of 7 per cent of GDP, starting from 1998. The intensification of the pace of privatisations of public corporations could play a more important role in reducing the debt.

-The Commission assesses that the structural deficit (rid of its cyclical fluctuations) aimed at the 0.8 per cent level for deficits in 2001 must be adequate to secure a safety margin so that the 3 per cent ceiling set by the agreement will not be ultim ately exceeded.

Structural reforms are essential for an improvement in the Greek economy's effectiveness, particularly in the massive public sector.

ECOFIN is expected to ratify the Greek convergence programme by issuing an official avis based on the Commission's recommendation at its session on Oct. 12.

Gov't presents bill to overhaul Athens,Piraeus urban transport

The government yesterday released a bill to rationalise and unify the sprawling Athens and Piraeus urban transport systems, allowing a write-off of 950 billion drachmas in debts and incorporation of a new metro being built for the capital.

The bill was devised by Transport and Communications Minister Tasos Mantelis, who outlined its contents at a news conference yesterday.

Under the terms of the bill, state-owned Athens Urban Transport Organisation (OASA) will head separate companies currently running the city's blue buses, trollies and green buses, and electric railway, which is being expanded into a fully fledged metro system.

The firms are destined to become subsidiaries of OASA, which is to undertake strategic planning for city transport, also allocating and checking services for its future subsidiaries.

OASA will set up a traffic control centre, devise timetables, and expand or abolish routes.

Local government will have the right to acquire up to 40 percent of OASA's stock, and set up municipal-run transport, in line with OASA's strategic planning.

OASA will also recommend measures to the transport ministry to ease the circulation of buses in the city's congested traffic, with the ministry coordinating any changes with other ministries.

Agreement has already been reached with Public Works, Town Planning and Environment Minister Costas Laliotis to extend bus lanes in the capital by five kilometres, Mr. Mantelis said.

Under the terms of the bill, debts totalling 950 billion drachmas will be written off, which comprise a 450 billion drachma deficit for blue buses, 250 billion drachmas in financing for old debts, and 250 billion drachmas in new loans.

Every September, the government will announce its pricing policy for the next calendar year and set targets for operational spending.

Mr. Mantelis said that fares would not rise in 1999, and tickets would continue to be valid for both buses and trollies.

Long-term supply contracts forged by OASA will be financed from the public investment programme with 134.145 billion drachmas for allocation between 1999 and 2002.

The procurement contracts are for 750 new buses, 192 new trollies and 120 carriages for the electric railway.

The government is to hire 200 bus drivers from among the vehicles' previous owners during a short-lived privatisation in the early 1990s; and from among bus drivers who lost their jobs in that denationalisation, which was later reversed by the ruling PASOK party in a change of government.

Surplus staff will be transferred within OASA and its subsidiaries, and retrained if necessary. Around 700 staff are to be transferred into the transport sector from other public sector services, Mr. Mantelis said.

Under the terms of an article in the bill, the new Athens metro being built is to be incorporated into the capital's unified transport system.

Within six months of the bill becoming law, Attiko Metro, which is supervising construction of the new underground system, must give the transport ministry an operational plan for two lines nearing completion, and how they will connect with existing bus and trolley services.

From the date the operational plan is endorsed, Attiko Metro will fall under the jurisdiction of the transport ministry.

Three months later, Attiko Metro will create a subsidiary to handle transportation.

The subsidiary will merge with the existing electric railway operator within three years under a special decree to be issued nearer the time by the transport ministry.

Gov't welcomes country's biggest ever tourism investment

Development Minister Vasso Papandreou yesterday welcomed a plan by a group of Greek and Greek-American businessmen to spend an initial 50 billion drachmas in developing a stretch of the Peloponnese for tourism.

The investment spanning four chunks of land in Messinia is considered to be the largest tourism investment project ever undertaken in Greece, and will require the approval of parliament.

It forms part of Ms Papandreou's policy of subsidising the creation of integrated tourism development areas around the country by private sector investors.

"The Messinia project meets the government's policy of improving the quality of Greece's tourism product. It is significant that it is taking place in an area of western Greece that has no tourism development," Ms Papandreou told a news conference.

In the initial phase, the plan involves the construction of luxury hotels totalling 2,300-beds, two 18-hole golf courses, a conference centre, a thalassotherapy centre, sports facilities and a shopping mall.

The project is expected to be completed by 2002 and will create 1,000 jobs in the area, with spending expected to reach 200 billion drachmas.

Buildings will cover only one percent of the land for development in the first phase, and five percent at the end of the project.

Remaining land will retain its natural greenery, or undergo landscaping, in line with a policy to protect the environment. The project's investors are shipowner Vassilis Konstantakopoulos, who owns the land to be developed, and a group of Greek-American businessmen.

They have set up Messinia Tourist Enterprises SA to carry out the scheme.

The Konstantakopoulos shipowning family of Messinia has a 95 percent stake in the company.

The remaining five percent is held by the three Greek-Americans: 2.50 percent by Californian businessman Angelos Tsakopoulos; 1.25 percent by Chicago-based lawyer and banker Jim Rigas; and 1.25 percent by New York engineer Peter Pappas.

The project will be funded by 35 percent from shareholders' equity, excluding the value of the privately owned land; 35 percent through bank loans; and 30 percent through state subsidies under a development law. Expressions of interest for the project were called last year.

The deal will have to secure a parliamentary vote in line with all investments worth more than 25 billion drachmas subsidised under the same development law.

At the moment, Messinia has just 33 hotel beds to 1,000 residents, sharply lower than the Dodecanese islands, where the ratio is 530 to every 1,000 residents. On completion of the project, Messinia will have 85 beds to 1, 000 inhabitants.

"As a government we support this project being implemented as soon as possible," Ms Papandreou said.

Two foreign firms bid for Hellenic Duty Free Shops

Saresco of France and Kappe of the Netherlands yesterday entered bids in a privatisation tender through the bourse for a 67 percent stake in Hellenic Duty Free Shops SA, the Public Securities Enterprise (DEKA) said.

It was the second tender for the company after the first fell flat earlier this year. The sale is part of the government's wide-ranging privatisation plan.

A bid by Saresco with listed Papaellinas and Sarandis was accepted. The firm, which had also taken part in the first tender, yesterday offered 3, 250 drachmas per share accompanied by a copy of a bank letter of guarantee.

It has been asked to bring the original.

Rejected by the authorities was Kappe's bid, which offered 3,300 drachmas per share but no letter of guarantee. DEKA said the group had failed to comply with the tender's rules.

The government had set 3,100 drachmas per share as the floor for bidding.

Hellenic Duty Free Shops has already floated a 20 percent stake on the Athens Stock Exchange. The current flotation is to offer most of the remaining stock.

Greek stocks slump on decline by European markets, sale tender

Greek equities lost ground in scant trade yesterday, affected by declines in other markets in Europe and caution over a tender through the bourse to privatise Hellenic Duty Free Shops SA with bids due after the session's close, analysts said.

The general index ended 1.80 percent down at 2,120.90 points with turnover at 30.7 billion drachmas, slightly down on 33.6 billion drachmas in the previous session, on 6,413,000 shares traded.

Sector indices mostly finished lower.

The heavily weighted banking sector plunged 1.74 percent, Insurance dropped 0.95 percent, Investment rose 0.48 percent, Leasing lost 3.22 percent, Industrials slumped 2.71 percent, Construction dropped 2.07 percent, Miscellaneous shed 3.25 percent and H olding fell 0.99 percent.

The parallel market index for small cap companies ended 1.21 percent lower. The FTSE/ASE-20 blue chip index lost 1.69 percent to end at 1,281.28 points.

Of 250 shares traded, laggards outpaced advancers by 178 to 51 with 21 remaining unchanged.

Simitis speaks with newly appointed Albanian PM Majko

Prime Minister Costas Simitis on Wednesday held a telephone conversationwith his newly appointed Albanian counterpart Pandeli Majko, govern ment sources said.

Mr. Simitis congratulated Mr. Majko on his appointment and invited him to visit Athens on Nov. 12, sources added.

Accepting the invitation, Mr. Majko expressed reservations over the date of the visit, the same sources said, adding that it will be fixed through diplomatic channels.

Meanwhile, commenting on the formation of the new Albanian government, Alternate Foreign Minister George Papandreou said Greece hoped the new leadership would prove to be a catalyst for positive developments in the neighbouring country.

"We fully support the new prime minister in his efforts to tackle the most pressing and important issues that Albania faces today, i.e. the restoration of public order, the fight against corruption, the economy, and the institution-building process," he said.

"We call on President (Rexhep) Mejdani to take political initiatives to revive the spirit of dialogue and round tables with a constructive opposition. A constructive opposition is one that takes part actively in parliament and the constitutional process. It is also totally against those tactics which contribute to the recent violent events in Tirana," he added.

George Papandreou cancels trip to Belgrade

Alternate Foreign Minister George Papandreou, currently the Councilof Europe's rotating presidency chairman, has cancelled a scheduled visit to Belgrade tomorrow after the refusal of Yugoslav authorities to grant entry visas to an adequate number of foreign participants for a conference in the Yugoslav capital.

Mr. Papandreou was to go to Belgrade for the opening of the "International Conference on Broadcasting for a Democratic Europe: The case of the Association of Independent Electronic Media - ANEM", organised by the secretary general of the Council of Europe. He expressed his "full support to the organisers of the conference" and said that he "shared the efforts put forward for the strengthening of the role of the media in Yugoslavia".

Reduced winter prices on passenger ferries

Passenger ferries prices will decrease by 20 per cent as of today and until March 31, 1999, compared to summer rates. Reduced prices are valid on all primary and secondary coastal shipping routes, as well as on the Saronic routes - with the exception of local destinations.


Mostly fair weather is forecast throughout Greece on Thurday with cloud in the nortwest of he country in the evening. Temperatures in Athens will range between 16-28C, while in Thessaloniki from 12-26C.


Thursday's rates (buying) U.S. dollar 286.777 British pound 486.378 Japanese yen (100) 211.167 French franc 50.965 German mark 170.857 Italian lira (100) 17.293 Irish Punt 427.056 Belgian franc 8.283 Finnish mark 56.169 Dutch guilder 151.578 Danish kr. 44.951 Austrian sch. 24.281 Spanish peseta 2.014 Swedish kr. 36.452 Norwegian kr. 38.654 Swiss franc 206.564 Port. Escudo 1.667 Aus. dollar 169.751 Can. dollar 188.083 Cyprus pound 576.352


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