Athens, 28 May 2009 

Interview of the Minister of Economy and Finance to the special edition of Kathimerini, "The Economist"

What is the Greek economy's reaction to the crisis?

For some months now, the world is in the thrall of the worst post-war financial crisis. A crisis that today affects Europe in its entirety. Each prediction on the course of the Eurozone economies is gloomier than the last and the general conclusion is that the recession will be more intense than anticipated. By 2010, another 8 million people will become unemployed in Europe, while the fear of social upheavals increases. Deficits are expected to rise even more, and many countries are expected to face the excessive deficit procedure.

Many European countries have already implemented strong stimulus packages aimed at dealing with the crisis; these correspond to more than 5% of EU's GDP. Greece is not among the countries that can afford this luxury. its excessive public debt, which was mainly accumulated during the last three decades, but also its significant competitiveness deficit, drastically restrict our country's capabilities when it comes to implementing more measures to support real economy.

Given these facts, the plan our Administration is following to deal with the crisis revolves around three pivots. The first is the gradual reduction of debt and deficit, in order to decrease the cost of the Greek Government's borrowing and economize resources that can be used to stimulate development and reinforce the welfare state. In this context we are already carrying out measures, like the implementation of a prudent fiscal policy, the reduction of  elastic expenditure of all ministries by 10%, the limited public sector hiring (except fields of education and healthcare), the austere auditing of public authority, hospital and insurance fund spending, the implementation of new integrated procurement system in the healthcare sector, the application of new systems and technologies for monitoring pharmaceutical expenditure, the adoption of a leasing system for public sector procurements, the creation of a Unitary Authority responsible for paying wages to all civil servants and the realization of the programme for the restructuring of Hellenic Railways (OSE). At the same time, the tax collecting mechanisms are now being closely monitored; new systems are being used for verifying and cross-checking tax data, while we are utilizing market know-how, in order to achieve better results in the effort to collect assessed debts owed to the Government.

The second pivot aims at providing support to real economy, through measures that include the guarantee of the Greek citizens' deposits, the implementation of a programme for enhancing liquidity in the economy, the regulations for the protection of borrowers, the implementation of programmes by the Credit Guarantee Fund for Small and Very Small Enterprises (TEMPME) which provide low interest rate loans to 80,000 businesses, the immediate launch of actions for small and medium-sized enterprises in the context of the 2007-2013 NSRF. Furthermore, another series of measures is underway: these are intended to support critical sectors of Greek economy, like tourism, construction, the automobile sales sector and exports. At the same time we are continuing the implementation of a series of policies that will boost growth in Greek economy and enhance its prospects vis-a-vis the crisis. Through the Investment Law more than 6,000 investments are being supported, worth a total of 12 bn. euros, and creating 28,500 new jobs throughout the country. Simultaneously, new investments in the context of Public-Private Partnerships are moving ahead, utilizing private funds worth 5.7 bn., for the construction of 327 social infrastructure projects. We are implementing the largest infrastructure construction project ever seen in Greece, worth 19 bn. euros;  large development projects, like the Egnatia Motorway, are being completed and other important infrastructure projects, like the ?Development Roadways' and the international airport at Kasteli of Crete are well underway. We are activating all the Operational Programmes of the 2007-2013 NSRF, through which approximately 36 bn. euros will be utilized, originating from national and EU funds.

The third pivot is the provision of concrete support to the citizens most in need of the state's help. Through the National Social Solidarity Fund 450 million euros have already been allocated for such actions as the payment of the extraordinary Social Solidarity Allowance to pensioners, the unemployed and the handicapped. Furthermore, in the context of the fiscal policy, we are providing an extraordinary support allowance of up to 500 euros to 1,860,000 wage earners and pensioners. We are also following proactive policies to bolster employment and we are commencing the implementation of a comprehensive programme, worth a total of 3.2 bn. euros originating from national and EU funds, to support 1,300,000 workers.

Apart from these measures, the Government is preparing a new generation of structural reforms that will effectively deal with the deficiencies of Greek economy, enhancing its competitiveness. The Government is determined to move ahead with the far-reaching reforms that should have been carried out in our country during the past two decades; to create the foundations for a growth that does not depend on borrowing and consumption,  but relies on the production of high-quality and competitive products and services, benefitting both the economy and the people.

In this critical conjunction, the Government has made a clear and non-negotiable choice: to steadily follow the path of responsibility and optimism, placing national interests before any temporary political gains. It proceeds determined to safely steer the country through the crisis and to bring about the conditions that will secure a truly better day after.