Financial News: FinMin: Privatization program in final stages

The government is entering the final stage of launching an ambitious privatization and state property management program as an inter-ministerial privatizations commission meeting on Wednesday will appoint the first consultants after examining the framework of the program.

Greek Finance Minister George Papaconstantinou, speaking to reporters on Tuesday, said a draft plan would be ready in the next few weeks -to be discussed with the troika and approved by the cabinet, while the ministry will also present it to Parliament. The ministry expects to have completed the appointment of privatization consultants by the end of June.

The Greek minister said government plans so far do not include any specific number of real estate properties, but only the approach of having a better management. This framework includes making a record of real estate property, improving their value and clearing of any bureaucratic obstacles. Papaconstantinou stressed, however, that an early estimate raises the value of real estate assets of non-listed public sector enterprises to around 8.0 billion euros.

“There might be something by summer,” the minister said, adding that despite the fact that there were thoughts of promoting the securitization of future revenues, there were problems with overdue debt to the public sector. Papaconstantinou said he has regular contacts with Deutsche Telekom but stressed that there was no talk of selling an additional equity stake of OTE to the German group. He reiterated he supported the creation of a state pylon in the Greek banking sector and underlined that privatization proceeds would be used to cut the country’s public debt although he noted that the government has not yet specified the way (bond repayment, repurchase from the secondary bond market, etc.).

Papaconstantinou said the government will unveil, in the next few months, the necessary interventions to deal with possible risks in the execution of the state budget for 2011 although he noted that no decision has been taken yet on whether these interventions would cover revenues or spending. Commenting on a shortfall in budget revenues in the first two months of the year, Papaconstantinou said the budget’s overall picture was better compared with the same period last year and stressed that any decisions on cutting spending would be taken on a political level.

The Greek Finance minister said ministry officials have already begun drafting a macro-economic scenario of a Medium-Term Fiscal Strategy Framework 2012-2015 and that each government ministry has set up a task force to specialize on the measures. The ministry has already briefed the Prime Minister over this work and reiterated that the Medium-Term Framework would not include any horizontal cuts in wages and pensions, higher tax factor or more cuts in a Public Investment Program. The program is expected to be approved by the cabinet by April 15 and ratified by the Parliament by May 15.

Commenting on the decisions reached by EU member-states, Papaconstantinou sounded optimistic that the package would be approved by an EU Summit this week and stressed that extending the repayment period of the 110-bln-euro loan and lowering its interest were a done deal. “These positive developments do no substitute the government’s effort in the framework of the memorandum,” towards achieving fiscal consolidation, the Greek minister said, adding that by the end of the first quarter Greece would have fully met most actions envisaged in the memorandum and stressed there was a hope that the country would not have to resort to a support mechanism to cover the 25 billion euros needed to be raised through markets in 2012.

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