Athens News Agency: News in English (AM), 98-11-25

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

NEWS IN ENGLISH

Athens, Greece, 25/11/1998 (ANA)

MAIN HEADLINES

• Domestic interest rates to sink to 7.0 pct on EMU entry
• Blue-chip banks keep ratings, get overweight recommendation
• Greek markets welcome long-term bond rate decline
• Athens-Thessaloniki rail link shut due to repairs
• Greek stocks post gains in heavy trade
• ITEP says 1998 a better year for Greek tourism
• Pangalos talks with Croatia's Granic
• Pangalos: Turkey squarely to blame for lack of Cyprus solution
• V. Papandreou in Moscow
• Greece satisfied over Albanian constitution referendum
• EU's draft budget the focus of member-states' ministers
• Strange 'cartography' in latest official Turkish edition
• Weather
• Foreign exchange

NEWS IN DETAIL

Domestic interest rates will drop to 7.0 percent from 13 percent on the country's entry into European economic and monetary union (EMU) by January 1, 2001, National Economy and Finance Minister Yiannos Papantoniou said yesterday.

The decline in rates will bring the government an extra 600 billion drachmas that is destined for social spending, although the sum could also be used as a nest egg if a new global financial crisis battered the economy, the minister said.

He was addressing parliament's financial affairs committee on the first day of work on the 1999 budget, which is scheduled for a plenary vote towards the end of December.

The ruling PASOK party's platform in June's Euro-elections and in national polls in 2000 would be a healthy economy, and the time had come to reap the gains of tight policy, Mr. Papantoniou said.

At the same time, meeting EMU entry requirements should not lead to complacency and generate unreasonable financial demands.

The targets met were fiscal convergence and reduction of the public debt to 105 percent of gross domestic product (GDP) in 1998 from 115 percent in 1993.

In addition, the government had lowered consumer price inflation to 4.0 percent from 14 percent in 1993 and cut interest rates to 13 percent from 28 percent in 1993.

The rate of GDP growth also had risen to 3.5 percent in 1998 from negative growth of 1.6 percent in 1993.

"This (rate of growth) is higher than the European Union average," Mr. Papantoniou said.

The government had made progress in attaining social justice by attaining an increase in real income by 1.5-2.0 percent each year and taxing large real estate and capital in the stock market.

It had also doubled spending on education and health, boosted revenue from Value Added Tax, and launched programmes to combat unemployment and aid pensioners.

Another measure to rectify social injustice had been to root out large- scale tax evaders and release their names to the media.

"The announcement of acts of tax evasion and the names of wealthy, well known members of the public will continue. We will be ruthless in clamping down on tax evasion. Wage earners cannot bear the tax burden alone," Mr. Papantoniou said.

Blue-chip banks keep ratings, get overweight recommendation

Three international financial and credit rating institutions yesterday affirmed the long-term ratings of two domestic banks, also recommending overweight positions on expectations of lower interest rates, strong results and good potential in asset managem ent.

Fitch IBCA, a London-based rating agency, affirmed the BBB long-term ratings of both Alpha Credit Bank and Ergobank, the two largest Greek private sector banks.

At the same time, the banks' short-term, individual and support ratings of F3, Band 2, respectively, were also affirmed.

The agency said that the two banks had performed consistently well in relation to their domestic peers and performance ratios also compared well internationally.

Its report said that there were some structural changes taking place within the Greek banking sector which would present some new and difficult challenges for domestic banks.

Fitch said that the Greek market remained very competitive and was likely to become more so as banks positioned themselves to face the challenges of European economic and monetary union.

Credit Suisse First Boston recommended an overweight position in Greek banks on expectations of lower interest rates and good potential in asset management, mortgage and retail lending and privatisation.

CSFB said its top picks in the banking sector were Alpha Credit Bank for its effective growth strategy and strong management and National Bank of Greece for its restructuring potential.

It said that Greek banks had outperformed the Athens bourse by 22.6 percent this year and 51.1 percent since 1996 with declining interest rates the main factor.

Merrill Lynch recommended accumulation of shares in National Bank of Greece, which it rated a long-term buy on strong nine-month results, with current fair valuation seen at 55,000 drachmas a share.

Greek markets welcome long-term bond rate decline

Greek financial markets yesterday welcomed a new fall in long-term interest rates and a successful auction of a 15-year state bond.

The finance ministry accepted bids totalling 260 billion drachmas, slightly up from a target of 250 billion. Yields dropped to 7.28 percent from 7.42 percent in the previous auction.

In the secondary bond market trading was subdued. The 10-year bond price was unchanged at Monday's 107.15 drachmas.

In the domestic interbank market the Athibor monthly rate fell to 12.27 percent.

The one-year rate was stable at 11 percent.

Bankers reported foreign exchange outflows totalling 90 million DMarks, a reflection of the US dollar's sharp rise in international markets.

The drachma was lower against the dollar at 287.08 at the central bank's daily fixing.

The Greek currency was almost unchanged from Monday against the Ecu and the DMark at 330.420 drachmas and 167.800 drachmas respectively.

Athens-Thessaloniki rail link shut due to repairs

The Athens-Thessaloniki rail link will be shut for the next two or three days because of damage caused by Monday's torrential rains, Hellenic Railways Organisation (OSE) said yesterday.

OSE said in a statement that damage had been reported to tracks at a number of locations.

The Corinth-Tripoli link in the Peloponnese will also be closed for the next two days to allow for repair work to be completed.

Greek stocks post gains in heavy trade

Greek equities continued moving higher yesterday but failed to break the 2, 500 point barrier for the second consecutive session on the Athens Stock Exchange.

The general index ended 0.72 percent up at 2,495.06 points, off the day's highs.

Trading was extremely heavy with turnover at 75.4 billion drachmas reflecting strong buying interest in blue-chip shares by foreign investors.

Volume was 16,007,000 shares. Most sector indices scored gains.

ITEP says 1998 a better year for Greek tourism

1998 was a good year for Greece's tourism industry, according to the latest report by the Tourism Research and Predictions Institute (ITEP) presented at a press conference yesterday.

The report predicts that the increase in arrivals this year compared to last year will exceed 10 per cent and overnight stays will increase by 11 per cent. ITEP predicts a similar increase in tourist arrivals next year, expecting the number of tourists visiting Greece to reach 13 million, a record figure.

ITEP said that the increase in arrivals in 1998 was combined with a considerable increase in prices charged by hotels. Hoteliers are also expected to benefit from the depreciation of the drachma in March 1998 as well as from favourable international con ditions for Mediterranean tourism.

The report makes particular reference to the repercussions for Greek tourism stemming from the expected introduction of the euro. ITEP believes that thanks to Economic and Monetary Union (EMU) and the introduction of the unified currency the rate of tourist arrivals in Greece from European Union countries will increase on an average of 5-6 per cent annually during the 2001-2015 period.

Greece has the second smallest size of local tourism compared to competitor countries which prevents a smoother allocation of tourist movement.

Among others, ITEP proposes greater density in air transport (charter flights should be added in the winter), hotel infrastructure should be upgraded, the winter tourist product should be developed and promoted and Greek destinations should be promoted continuously on a 12-month basis to extend the duration of the tourist season in the country.

Pangalos talks with Croatia's Granic

Foreign Minister Theodoros Pangalos yesterday had talks with his Croatian counterpart Mate Granic on issues related to security and cooperation in the region.

Mr. Granic was accompanying Croatian President Franjo Tudjman on a two-day official visit to Greece, which began on Monday. Speaking to reporters after the talks, Mr. Pangalos said he had discussed problems related to former Yugoslavia, efforts for peace in Bosnia and Kosovo and the prospects for European integration of the countries of former Yugoslavia and of Croatia in particular.

Mr. Pangalos said bilateral economic cooperation could be further developed, adding that the foreign ministry would inform Greek business circles about the privatisation programmes being implemented in Croatia "in order to secure the greatest possible participation".

He also stressed the importance to Greece, as well as for communications in the greater region, of the plan for the construction of a new highway along the Dalmatian coast.

Mr. Pangalos said the new highway would not replace existing roads but supplement them, adding that efforts would be made to incorporate the highway plan in the trans-European networks.

Mr. Granic said bilateral relations were very good and agreed with his Greek counterpart that efforts should be made to further cooperation in the economic, cultural, tourism, scientific and technological sectors.

He said he had briefed Mr. Pangalos on Zagreb's short-term plans regarding privatisation, the banking system, telecommunications and tourism.

Mr. Granic too described the new Dalmatian highway as being of major importance for all the countries of the region.

Pangalos: Turkey squarely to blame for lack of Cyprus solution

Greece has long insisted that open negotiations should be held with a view to securing implementation of UN Security Council decisions on the Cyprus problem, Foreign Minister Theodoros Pangalos said yesterday.

He was replying to reporters' questions after talks with his Croatian counterpart Mate Granic.

Despite the fact that no negotiations are being held - on Turkey's responsibility - to resolve the political aspect of the Cyprus problem, Mr. Pangalos said, "the Cyprus government is making efforts aimed at achieving progress in two areas which do not prejudge the final outcome: the reduction of armaments and (the maintaining of) communication between the two communities" on the divided island.

On these two issues also Turkey is completely intransigent, Mr. Pangalos said, adding that the visits by Turkish officials to the (Turkish-) occupied northern part of Cyprus and the presence of Turkish warplanes there are all part of this framework.

"Typical of the audacity of the Turkish government," he said, "is that while Turkish aircraft regularly land in the occupied part of the island, Ankara kicks up an enormous fuss every time a Greek aircraft lands in free Cyprus at the invitation of the legitimate government".

Mr. Pangalos said Turkish leaders should take note of the advice given recently by European leaders, namely that as representatives of a country they had no right to issue ultimatums and threats.

V. Papandreou in Moscow

Development Minister Vasso Papandreou is scheduled to visit Moscow shortly to discuss problems related to failure of the Russian side to provide agreed upon quantities of natural gas to Greece.

In an unrelated development, Ms Papandreou will leave on Friday for a four- day visit to Iran.

Greece satisfied over Albanian constitution referendum

Athens yesterday expressed satisfaction over the course of a referendum for Albania's new constitution. Foreign ministry spokesman Theodoros Theodorou said that the fact the referendum was held without any incident was "a very positive sign".

However, he expressed disappointment at the opposition Democratic Party's abstention from the referendum.

Despite inconclusive figures, all indications show that more than 50 per cent of the electorate participated, while the new constitution was adopted with a significant majority, the spokesman said.

"The referendum constitutes a decisive step on the road to the restoration of that country's political stability," he said, adding that Greece would continue to offer support to the neighbouring country.

EU's draft budget the focus of member-states' ministers

The European Union Council of finance and budget ministers convened here yesterday to ratify the EU's draft budget for 1999.

Greece was represented by Deputy Finance Minister Nikos Christodoulakis.

The Council disagreed with a Europarliament request for higher reserves to be created in the budget. To enable consent to be achieved, the need for flexibility in future European Union budgets was agreed. The issue will be discussed at an extraordinary budget council on Dec. 8.

Greece and Spain disagreed on the placing of credits from structural funds (1500 MECU) in the reserve, and as a result, a ballot was held in which the two countries succeeded in having the initial proposal withdrawn.

Strange 'cartography' in latest official Turkish edition

Athens yesterday stressed that "Turkish propaganda" had been made to look foolish by a recent official publication of the Turkish foreign ministry, which showed several major eastern Aegean islands, such as Rhodes, Samos, Hios and Ikaria as belonging to Turkey.

According to the Ankara-based "Turkish Daily News", an English-language daily, the map is the work of a Turkish writer to mark the 75th anniversary of the Turkish republic, and contains other gross errors, such as Iraq appearing in the place of Iran and

Armenia in the place of Azerbaijan.

The newspaper said the book, government-funded and expected to be distributed at Turkey's foreign missions, was a "scandal".

The government said the publication showed that Turkey's 'propaganda industry' had failed to mislead public opinion regarding historical reality in the region.

Replying to reporters' questions, government spokesman Dimitris Reppas said the government had already taken "the appropriate steps" regarding the publication.

WEATHER

FOREIGN EXCHANGE

(C.E.)

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