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Athens News Agency: News in English, 09-09-05

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

From: The Athens News Agency at <>


  • [01] PM unveils bold reform plan at TIF

  • [01] PM unveils bold reform plan at TIF

    Greek Prime Minister Costas Karamanlis on Saturday unveiled an ambitious reform plan aimed at helping the country exit the current financial crisis stronger, including drastic cuts in public spending, freezing pay rises for workers and pensioners of the public sector, combatting tax evasion and promoting structural changes.

    In what was widely greeted as the most crucial speech of his career as prime minister - the contents of which were kept strictly secret and not released to the press for the first time in the history of the institution - Karamanlis stressed that this was a crucial juncture for the economy and that a difficult two years lay ahead. He defended his decision to call early elections on October 4, just two years after his last election victory in 2007, saying that his decision to seek a fresh mandate from voters was prompted exclusively by the best interests of the country.

    "If we do not act immediately and decisively, the dangers will be great," he stressed.

    His traditional speech to the country's producer groups, from the podium of the Thessaloniki International Fair, focused on the necessity of dealing with economic developments at a time when the global economy had been hit by the worst crisis of the last 80 years.

    Karamanlis noted that the Greek economy was already suffering the consequences of external shocks, with lower shipping and tourism revenues limiting demand, commerce, exports and hitting the finances of households and enterprises, particularly small- and medium-sized enterprises. At the same time, the crisis had hit the execution of the state budget, with revenues down and budget spending rising because of higher social spending.

    The economy was additionally suffering from a huge public debt, accumulated in the past, with an annual interest payment burden of 12 pct. At the same time, the crisis intensified chronic economic problems.

    "There is no doubt that the next two years would be crucial for our future," he said, adding that 2010 would be a year of particular importance and all necessary policies must be immediately implemented to creating the solid foundations for a long-term development.

    "My intention was to complete the four-year term of the government and to implement an economic policy based on three axes....," Karamanlis said.

    He cited these as:

    -An austere and efficient control of public spending through the introduction of direct and medium-term measures,

    -A combat against tax evasion,

    -Structural changes creating new structures, capable of ensuring sustainable growth and a strong social state, focusing on improving competitiveness, labour relations, the pension system, the national health system, the wider public sector and education.

    Implementing this policy, however, required the right political environment, which did not exist because the main opposition party PASOK had locked the country into a protracted pre-election period ahead of the election of a new President of the Republic in March.

    "I called for early general elections to avoid a protracted pre-election period because we need a strong government with a plan and the will to deal with the crisis and to lay the foundations for a stronger future. This responsibility is a priority for me. Everything else comes second," he said.

    The Prime Minister presented in detail, the government's work in the past five and a half years, saying the implementation of an integrated infrastructural reforms plan was changing the country, with an extensive program to build new roads, improve port facilities and airports, new railway networks.

    "We completed a Third Community Support Framework Program without losing one euro," Karamanlis said, adding that government measures helped in improving investment conditions, promoted a "green" economy, while a Fourth Community Support Framework directed 80 pct of funds to Greek regions.

    He also pointed to the establishment of comprehensive special town planning rules, improvements in the country's energy balance in favour of "green" energy that had tripled the capacity of renewable energy sources and the signature of significant international energy deals (Burgas-Alexandroupolis oil pipeline, Italy-Greece-Turkey natural gas pipeline, South Stream and Greece-Romania-Hungary natural gas pipeline).

    Other policies strengthened a knowledge society, combining research with production, supporting innovation, presenting a digital strategy focusing on boosting broadband services (with significant results already), promoting an optical fiber network in the country, supporting a public unversity plan, and bringing Greece among the top five countries in the EU in spending for high education with spending at 4.6 pct of GDP.

    A pension reform policy succeeded in merging 133 different pension funds into 13 funds, while measures were taken to support social benefits and working mothers.

    Karamanlis then listed the government's achievements in reforming the wider public sector, with the sale of Olympic Airways offering a benefit of 1.0 million euros daily to public coffers, signing a strategic alliance for cargo services in the port of Piraeus, along with measures to support the shipping sector, tourism and the farm sector.

    "Greece has reported improved economic figures steadily since 2004, with unemployment falling steadily and spending to support a social state rising by 60%," he said.

    The Greek Premier underlined that the inflation rate performed better than the EU's average rate and noted that government policies have helped the country avoiding a deep recession like the one hitting other European countries. "Our strategy strengthened the country's resistance," he said.

    Karamanlis said the government has acted immediately after the crisis erupted taking measures aimed at limiting the impact of the crisis and preparing the economy for a dynamic recovery, based on prudent policies and not populism. These were measures to boost liquidity in the economy, offering state guarantees for savings deposits, protection of borrowers, and low-cost money to small- and medium-sized enterprises. At the same time, the government took difficult decisions to cut its fiscal deficit and its flexible public spending by limiting hirings (with the exception of the education and health sectors), supporting employment and the vital sectors of the economy (constructions, exports, tourism and the auto sector).

    Based on this facts, I have decided to ask for a new mandate by voters to implement the necessary policies, Karamanlis said, reiterating that his criterion for this decision was one and only: the nation's interests.

    "I know that because of the crisis, the country will face two crucial years ahead. Our strategic choices are two: either succumb to populism, or dare to take diffuclt decisions," he said.

    Karamanlis said populism will be pleasant for the short-term, but the consequences would be very painful for citizens in the future, while it would take much more time to exit the crisis.

    "On the other hand, if we dare take the difficult road now, if our priority is reforms and not efforts to become pleasant to citizens, then one thing is certain: We will exit this crisis soon and stronger, with new prospects for a long-term growth and a real social state".

    The Prime Minister stressed that the government must be very strict in its efforts to cut public spending, limiting fiscal deficits and gradually restructuring the economy. "Our program includes direct and medium-term measures," he said, such as:

    1. Freezing of all hirings in the public sector for 2010, with the exception of any necessary hirings by the Health and Education ministries.

    2. Strict limitation of hirings for an additional two-year period (one hiring for two retirements).

    3. Freezing of pensions and wages in the public sector in 2010, with special care for low wages and pensioners. Pay increases in the following years will be set according to the inflation rates of Greece and the Eurozone. The measure will cover non-listed public sector enterprises as well.

    4. No new social benefits for a period two years.

    5. Cutting overtime work by 30 pct for two years.

    6. Cutting by 30 pct of all transfer spending.

    7. Restructuring budget spending, focusing on sectors promoting economic growth.

    8. Creating a single authority for public sector payrolls.

    9. Introducing a new payroll for new hirings in the public sector and

    10. Cutting deputy compensation and the wages of all government, prefect and municipal authorities for the next two years.

    Karamanlis said the government's medium-term measures included, clear principles and procedures in drafting and executing state budgets, introducing specific methods for evaluating certain spending, drafting three-year budgets, promoting greater transparency in fiscal management, introducing detailed annual balance sheets by all agencies and organisations of the public sector and introducing clear numerical fiscal rules for each spending category.

    "Principles and rules everywhere to get the state finances in order. Strict control and full transparency," the Greek premier said.

    Our second aim is a "war against tax evasion". It is our responsibility to win this battle against a source of social injustice, that weakens the social state and undermines every effort for fiscal restructuring "I don't deny that all governments have their share of responsibility. But this phenomenon cannot be allowed to continue. And it will not continue however the cost. Our measures include: creating a single data base with all tax and social obligations of every citizen and every enterprise in the country, integrating tax and social security contributions, introducing an on-line system linking all cash registers and billing mechanisms of enterprises with the Finance ministry, obligatory electronic tax statements by enterprises and introducing living standards tax rates.

    The third aim is structural changes, creating structures to support a long-term sustainable growth and a strong social state. Measures include: opening of all closed professions, crucial to the economy, abolishing cabotage practices to support the sea cruise sector, simplifying business start up procedures, reforming the labour market with stricter conditions for granting unemployment benefits with the aim to returning to employment. In the pension system, we aim to cut the number of so-called heavy professions for newcomers in the job, stricter criteria for pensions to disabled people, stricter control to drastically cut social security contribution evasion, while in the health sector we plan stricter controls on supplies and offering more quality health services to citizens.

    Our reform program for the public administration sector envisages creating fewer and strong municipalities, boosting regional governments, while in the wider public sector it is necessary to drastically cut the number of public agencies, introduce stricter control of pension funds and municipal spending, continuing a program of privatisations and strategic alliances.

    "We emphasize the restructuring of Hellenic Railways, making a more efficient management of the state's real estate property, privatising the Mont Parnes casino, Thessaloniki Water and Larko.

    We seek two major reforms in the education sector, granting personal computers to all first grade students and reforming a Lyceum program, the premier said.

    Karamanlis went on to underline the great importance given by the government to law and order issues and the protection of life and property, as well as the right of citizens to enjoy open roads, schools and universities.

    "We are planning reforms against activities that paralyse city centres. We are also planning changes to university asylum, in linke with what applies in the rest of Europe," he said, stressing that places of learning could not be allowed to become hotbeds of lawlessness and crime.

    He also stressed the government's commitment to control illegal immigration, by putting an end to centre of crime, intensifying policing and through a common European policy and said the country could not tolerate uncontrolled waves of illegal migrants or modern slave traders.

    Turning to foreign policy and political issues, Karamanlis used the podium at TIF to send messages to neighbouring Turkey and the Former Yugoslav Republic of Macedonia (FYROM), stressing that Greece worked steadily for peace and development but was obliged to maintain a high deterrent capacity and the ability to fully defend its national sovereignty.

    He stressed that FYROM's leadership had to appreciate that history could not be altered or rewritten and urged Skopje to abandon populist and nationalist rhetoric and work toward a mutually acceptable name applicable for all uses, stressing that failing to do so would jeopardise FYROM's EuroAtlantic prospects.

    The premier also noted Greece's desire for friendly relations with Turkey, while underlining its obligation to actively contribute to a viable and functional solution of the Cyprus problem and that the status of the Aegean would not change because of provocations or threats.

    "We have laid down clear red lines. These lines we will not abandon. We do not bargain over them. We do not go back a single step," Karamanlis underlined.

    On the domestic front, the prime minister admitted that there had been mistakes, weaknesses and delays in the government's response to the crisis and the implementation of the reforms he had outlined.

    "I admit that in some cases, we needed to act faster, more decisively and make deeper changes," he said, while adding that the government had nonetheless taken significant steps in pushing through reforms and curbing public spending but now needed to take "leaps forward" in war against tax evasion and to fight harder on all three fronts of its plan for exiting the crisis.

    On this count, he levelled criticism at main opposition PASOK for fighting all structural changes and policies for reforming the economy.

    "The truth is that those that government for 20 years created a rotten state sector, with attitudes and structures that acquired deep roots and are not easily eradicated," he said, blaming PASOK for the great weaknesses of the Greek state sector and of continuing to dish out promises in spite of the economic crisis.

    "One thing is more than certain: if even a part of the promises dealt are carried out, the consequences would be catastrophic," Karamanlis asserted, adding that PASOK appeared neither to understand nor possess the basic tools for dealing with the crisis but was treating it as an opportunity for populism.

    "I assure you my decision to seek a fresh popular mandate was not an easy one. But it is the only responsible choice for dealing with the major challenges ahead, challenges that can only be met by clear-cut choices and bold action," he stressed, and warned that this was not the time for experimentation, negative vote or disaffection but a time to put the interests of the country first.

    Caption: Prime Minister Costas Karamanlis addresses producer classes at Thessaloniki International Fair (TIF) on Saturday, unveiling a programme of bold reforms. ANA-MPA - Alexandros Beltes.

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