Athens News Agency: News in English (AM), 99-12-16

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

NEWS IN ENGLISH

Athens, Greece, 16/12/1999 (ANA)

MAIN HEADLINES

• Major banks to cut interest rates Monday
• Bank of Greece gives signal
• New convergence plan sees higher growth
• Revaluation of drachma by June at the latest
• Equities slump, shrugging off rate cuts
• New major private healthcare centre to open by April 2000
• New HEPO president
• Simitis defends Helsniki summit decision in Parliament debate
• Aegean transports network touted
• Only territorial dispute with Turkey involves continental shelf
• G. Papandreou outlines positions on eradicating illegal drug use
• Weather
• Foreign exchange

NEWS IN DETAIL

The central bank yesterday lowered its key money market intervention rates by 0.75 percentage point, spurring the country's two largest commercial banks to announce across-the-board rate cuts effective on Monday. Other banks are expected to follow suit.

State run National Bank of Greece and private Alpha Credit Bank announced rate cuts of 0.50 percentage point on most deposit rates and 0.75 percentage point on many lending rates.

Both banks, which are blue chips on the Athens Stock Exchange, will lower their savings deposit rate to 7.50 percent from 8.0 percent.

National Bank is to reduce rates on consumer and personal loans to 15.50 percent and 16.25 percent respectively.

Floating rates on home loans are to drop by one percentage point to 11.75 percent, and operating capital loans by 0.75 point, also falling to 11.75 percent.

Alpha Credit Bank will reduce its rates on personal loans by 1.25 percentage point to 17.75 percent.

Finally, the Bank of Piraeus Group will cut its loan and deposit rates by roughly the same amount, effective on January 1, 2000. The banks in the group are Piraeus, Xiosbank and Macedonia-Thrace.

Bank of Greece gives signal

The Bank of Greece yesterday lowered its main intervention rates by 0.75 percentage point, the second reduction in just under two months, bringing domestic short-term loan rates closer to their euro-zone equivalents.

After a meeting of its Monetary Policy Council, the central bank announced a 0.75 percent reduction in the weekly intervention rate for two-week funds to 10.75 percent from 11.50 percent.

The Bank of Greece uses the rate in a tender most Wednesdays to help regulate liquidity in the interbank market.

It also slashed the primary overnight lending rate by 0.75 percentage point to 10.25 percent from 11.0 percent; and the secondary overnight rate by 0.25 percentage point to 9.0 percent from 9.25 percent.

In addition, the central bank reduced the Lombard rate by 0.75 percentage point to 12.25 percent from 13.0 percent.

On October 21, the Bank of Greece lowered key intervention rates by half a percentage point across the board.

The Monetary Policy Council said in a statement that its decision to go ahead with the rate cuts took into account the consolidation of core inflation around 2.0 percent, a level it was expected to hold in coming months. In addition, the level of ave rage annual harmonised inflation was promising.

Finally, the M4N liquidity index was expected to continue its slowdown, and the central bank had taken into account the government's updated European Union economic convergence programme, the statement said.

New convergence plan sees higher growth

Greece sees its gross domestic product (GDP) rising by 3.8 percent in 2000, growing to 4.3 percent in 2002, the country's latest European Union convergence programme said.

Submitted to the European Union's executive Commission yesterday, the 1999- 2002 programme forecast that the deficit would fall from 1.2 percent of GDP to 0.2 percent in 2001.

In 2002, a surplus of 0.2 percent would emerge, accompanied by a decrease in the public debt and inflation. The programme, a successor to the 1994- 1999 plan, was presented to reporters by National Economy and Finance Minister Yiannos Papantoniou.

Mr. Papantoniou said that a new central parity for the drachma in the European exchange rate mechanism had yet to be set but a decision would be taken in the next six months.

GDP growth, at 3.5 percent this year, was expected to "improve markedly" over the next few years, Mr. Papantoniou said.

He underlined that the government's growth targets were "conservative".

Similar rates of growth were projected for incomes. This year, per capita income in Greece was 69 percent of the Community average. Next year, the percentage will rise to 73 percent.

The general government deficit will fall to 100.3 percent of GDP in 2000, 99.5 percent in 2001 and 98 percent in 2002.

Mr. Papantoniou said structural reforms in the economy - deregulation and privatisation - would continue.

He cited deregulation of the telecommunications and electricity markets in 2000 and 2001 as examples.

Inflation, the critical criterion for Greece's inclusion in economic and monetary union, was projected to fall to 2.1 percent in 2000 and stabilise there for the next year, before falling marginally to 2.0 percent in 2002.

The levels were fully compatible with changes anticipated in the European Union's inflation rate, Mr. Papantoniou said.

Investments would remain at high levels as a percentage of GDP. Investment is already 25 percent of GDP, one of the highest rates in the European Union.

Employment was expected to grow, with a resulting fall in unemployment. The current 10.5 percent unemployment rate was projected to fall to 8.7 percent in 2002.

Mr. Papantoniou said that projections for a rise in employment were not attained in the previous convergence programme due to a large influx of migrants, offsetting the new jobs created.

The minister said there were no plans to increase current levels of taxation. Government policies on the distribution of wealth would eventually lead to a reduction in taxation, he noted.

Revaluation of drachma by June at the latest

Decisions on changing the drachma's central parity in the European exchange rate mechanism (ERM) and a final decision on whether Greece was eligible to enter the euro zone were expected by June 2000 at the latest, Mr. Papantoniou said.

The minister said that a discussion was under way with other EU member- states on a revaluation of the drachma but that no decision had been taken yet.

The deadline for shifting the drachma's central parity against the euro in the ERM was June, when an EU summit would also decide whether Greece qualified for entry into the euro zone, Mr. Papantoniou said.

Equities slump, shrugging off rate cuts

Equities dropped sharply on the Athens Stock Exchange yesterday with turnover reaching higher levels than in the previous session.

The market had already discounted rate cuts by the central bank and did not react to yesterday's decline, which also spilled over into commercial bank rates.

However, analysts were unable to explain why the market dropped so sharply in higher trade.

The general index ended 2.54 per cent down at 5,432.34 points. Turnover was around 319.087 billion drachmas. The parallel market index for small capitalisation stocks was down 4.53 per cent at 1,858.73 points.

The FTSE/ASE 20 index for blue chip and heavily traded stocks ended 2.32 per cent lower at 2,768.88 points.

Sector indices ended as follows: Banks (-1.88 pct), Leasing (-2.71 pct), Insurance (-3.56 pct), Investment (-2.62 pct), Construction (-5.56 pct), Industrials (-2.17 pct), Miscellaneous (-1.76 pct) and Holding (-4.15 pct). Of 323 shares traded decline rs led advancers at 295 to 27 with 1 issue remaining unchanged.

New major private healthcare centre to open by April 2000

The Inter-Balkan Medical Centre, a 424-bed subsidiary of the Athens Medical Centre, will be operational by April 2000, the group announced yesterday.

Speaking at a meeting of the Union of Institutional Investors, AMC vice- president Vassilis Apostolopoulos said the group also planned to open diagnostic centres in Sofia, Skopje, Belgrade, Tirana and Podgorica, which would refer patients to the Thessalo niki centre for hospitalisation if necessary.

The group already operates such a centre in Bucharest since 1997.

In a strategic partnership with Interamerican, Greece's leading life insurance firm, the group has formed the Eurosite consortium, which plans to set up a 45-billion drachma multifunctional medical facility in Paiania, east of Athens, with a 750-bed cap acity, conference centre and hotel.

New HEPO president

The new president of the Hellenic Foreign Trade Board (HEPO) was appointed yesterday, with former PASOK deputy Panagis Benetatos getting the nod. Mr. Benetatos, who was appointed by the national economy ministry, was previously the head of the Industrial Reconstruction Organisation (OAE).

Simitis defends Helsniki summit decision in Parliament debate

The recent Helsinki EU summit's "historic" decisions on the terms for Turkey's candidacy are a vindication of Greek policy, Prime Minister Costas Simitis said yesterday in Parliament.

"Greece attained all its aims in Helsinki, achieving a real and not virtual candidacy for Turkey. This, on the part of Turkey, implies acceptance of all criteria applying to the candidacy of any other country...It also implies acceptance of the principles of international law and treaties in foreign affairs as well as of the procedures for the peaceful resolution of differences through the International Court at The Hague, so that the rules of the game are clear," he said during an off-the-agenday debate on foreign policy. The debate was held at the request of Democratic Social Movement (DHKKI) leader Dimitris Tsovolas.

The prime minister said if differences with Turkey were not peacefully resolved on the basis of the UN Charter, the candidate country would have to refer them to The Hague within a reasonable period of time.

"Turkey cannot drag issues on for years... The Union can even intervene and point out that the reasonable period of time has run out, and the need for referring the differences of a candidate country to the Court at The Hague, " he said.

"Turkey's decision to accept the text of the European Council and Prime Minister Bulent Ecevit's attendance certify its endorsement of the principles, terms and conditions which must govern its behaviour from now on," he added.

He also expressed the view that the EU decision would contribute to the growth of a positive climate for cooperation in the region.

Mr. Simitis forecast that Cyprus would gain EU membership as soon as negotiations were completed, but this should not lead to a relaxation of the efforts for a solution of the island-republic's political problem.

Main opposition New Democracy (ND) leader Costas Karamanlis predicted that Greece will be in a worst position now regarding Greek-Turkish affairs.

"The premier admitted that from 2005 on there will not be a mechanism of real penalties to force Turkey into compliance to international legality before its full accession (to the Union).

"In other words, we will be in a worst starting point than today, meanwhile, our negotiating position will weaken within the EU," he said.

"...for the first time Europe accepts the standing positions of Turkey and that is done with our participation," he said.

"The European Council seems to recognise and legalise the Turkish territorial claims, leading us to across-the-board negotiations with Turkey without terms and preconditions, something that is its standing position for the last 25 years. There's a great truth: Greece is the only EU member- state threatened,"Mr. Karamanlis said.

Aegean transports network touted

Greece aims at the creation of an "Aegean metro system" connecting the Greek islands of the Aegean with the Asia Minor coast as a corridor of European transport networks, Aegean Minister Stavros Benos said yesterday.

Addressing a press conference on the island of Lesvos, Mr. Benos said "our aim to create a network of combined transport, the 'Metro of the Aegean', which will lead to stability of transports...

"The 'Metro of the Aegean' has been planned based on the principle of connecting the cities of islands with ports and airports of the (Asia Minor) mainland," the minister said.

He also concluded that the plan to be drafted will be a result of a study.

Only territorial dispute with Turkey involves continental shelf

Apart from delineation of the Aegean's continental shelf, Greece has no outstanding territorial disputes with Turkey, Defence Minister Akis Tsohatzopoulos told a session of the Parliamentary committee on national defence and foreign affairs yesterday.

"We say that there is nothing apart from the continental shelf," he stressed.

He added that none of Turkey's unilateral claims of territorial ambiguity "had any basis in law".

"We will not be a party to any other issue being referred to The Hague, without this meaning we are able to stop Turkey from seeking recourse to the court," Mr. Tsohatzopoulos said, adding that Turkey had yet to accept The Hague court's jurisdiction.

The minister was speaking on the general outcome of last Friday's EU summit in Helsinki at his briefing of the committee.

His comments came in relation to the EU text's urging that all outstanding border differences and related disputes be resolved on the basis of peaceful resolution of differences, in accordance with the UN Charter.

G. Papandreou outlines positions on eradicating illegal drug use

Foreign Minister George Papandreou and Deputy Health Minister Theodoros Kotsonis yesterday reiterated their positions on combatting illegal drug use in Greece.

In addressing Parliament's inter-party committee, Mr. Papandreou stressed the need for society to "free" itself from "taboos", adding that he is "a supporter of heroin distribution by health centres and the disassociation of cannabis from (the) hard drugs (category)".

The foreign minister noted that his statements expressed his personal views, while noting that Greece should follow suit with trends existing in western Europe.

He said the foreign ministry is especially interested in the subject, as the illegal drug trade involves various international criminal rings.

The Greek minister also noted that Athens will soon sign agreements with Ankara regarding the combatting of the illegal drug trade, while similar initiatives will be implemented with Albania and the Former Yugoslav Republic of Macedonia (FYROM)

Mr. Kotsonis explained that heroin distribution to long-time users by health centres will take place only under specific conditions and only when the user is at an advanced stage of dependence. He stressed that the success of such a program me can only be guaranteed with the consent of society, "otherwise it will fail".

"In no way did I say 'give heroin to the people', this is populism, aiming at different goals, which I will not serve," Mr. Kotsonis said.

In conclusion, he reassured the committee that Organisation Against Drug Abuse (OKANA) programmes will continue to operate normally and will be expanded.

WEATHER

FOREIGN EXCHANGE

Thursday's rates (buying)
U.S. dollar          326.556
Pound sterling       524.074
Japanese yen (100)   315.605
French franc          49.877
German mark          167.280
Italian lira (100)    16.897
Irish Punt           415.422
Belgian franc          8.110
Finnish mark          55.026
Dutch guilder        148.464
Danish kr.            44.031
Austrian sch.         23.776
Spanish peseta         1.966
Swedish kr.           38.025
Norwegian kr.         40.305
Swiss franc          204.540
Port. Escudo           1.632
Can. dollar          220.164
Aus. dollar          207.030
Cyprus pound         568.991
Euro                 327.172

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