FinMin: Effort to reduce deficits continues, no debt restructure

The effort to reduce the Greek deficit that commenced in 2010 is continuing, and 26 billion euros in interventions have been announced, of which 3 billion euros are to ensure that the 2011 targets for the deficit reduction will be met, Greek finance minister George Papaconstantinou told a press conference on Saturday on the sidelines of the spring session of International Monetary Fund (IMF) and World Bank in Washington, and once again denied speculation of a restructuring of the Greek debt.

This is a program that is founded mainly on containing expenditures and to a lesser degree on increasing revenues. As regards the containment of expenditures, the program is not founded on "horizontal measures" such as cuts in salaries and pensions, but on structural interventions that contain the salary cost of the public sector, reduce the operational and consumption expenses, better target the social expenditures, and reduce the deficits in the DEKO (public utilities and state organisations), Papaconstantinou said.

Regarding revenues, it is an effort to broaden the tax base and combat tax evasion and contribution evasion, he added.

The finance minister reiterated that the program, with all its individual interventions and annual expenditure ceilings, by ministry, will be incorporated in a draft law that will be tabled in parliament by mid-May.

He further described the program for denationalisations and exploitation of the state property as possibly one of the most ambitious programs in Greece in recent years, and spoke of interventions in a series of sectors crucial for the economy such as ports, airports, energy and telecoms, sectors that he said require private capital and private knowhow in order to be able to modernise and change and generate jobs, investments and growth.

It is anticipated that the program will raise 15 billion euros in revenues by 2013, and 50 billion by 2015, resulting in the prospect for a substantial reduction of the country's immense debt, Papaconstantinou continued.

That, he stressed, is the course on which the government has embarked. It will not be an easy course in a difficult conjuncture for the Greek economy, with the first signs of recovery having timidly begun to appear and are hard to see right now, but with unemployment continuing to climb and with the major problems faced by the Greek citizens.

The government is moving ahead and will not change course because it believes that only this path can bring the country out of the crisis, he said.

Papaconstantinou explained that it is one thing to cut salaries and pensions, another thing to contain the deficits in the DEKO, and another thing to reduce the salary costs of the public sector through a policy of one hiring for every five withdrawals, another thing to reduce the public sector's consumption expenses, and yet another thing to attempt to broaden the tax base of the public without increasing VAT.
"What we are trying to do at this time is to reduce the deficits. Because in this country, so long as the deficits are not reduced, the debt will continue to increase," he said, noting that the country spends each year 20-25 billion euros "more than we have".
"This is what it is all about," the minister said, adding that if this problem was not confronted now, the coming generations will continue being burdened with debts. "We will not do this," he stressed.

On the role of the international markets, Papaconstantinou warned: "Woe is it if the policy of this government depended on the daily fluctuations of the markets."

"We have a goal, and it is a very clear one: We will reduce the deficits, we will bring back growth, we will preserve the social cohesion in the country, and we will take it out of the crisis," he stressed, adding that, at this time, the course being followed is the only one that can bring the country out of the crisis. "Other paths exist, many of the. But the simply lead to bankruptcy, to the country's marginalisation, and we will not take those paths."

He recalled that, last year, many analysts were taking it for granted that the eurozone would break up and Greece would go bankrupt. Other countries in the past have gone through what Greece went through, and a majority of analysts had said then, too, that those countries would go bankrupt, that they would not succeed.

"But they were proved wrong," he stressed.

"We want to be judged on the basis of what we have accomplished, with whatever shortcomings and delays we may have, and on to what degree what we are doing is leading somewhere. I explain: high primary surpluses, which we created having already reduced the primary deficits to nearly zero this year, and having begun to create primary surpluses, in other words surpluses before interest, as of next year. We’ve done this before in the country and can repeat it. High growth rates: we have done this, too, again. And all the structural changes we are making lead to that, to the country being able to have a larger growth and of course a lower cost of borrowing, which is naturally aided by the recent decisions of the European Council with the reduction of the cost of borrowing for the official loans from the eurozone countries," Papaconstantinou elaborated.

Turning to the speculation of restructuring of the Greek debt, the finance minister said that no such discussion is taking place: "We are discussing absolutely nothing. Extending the repayment period for the loan from the EU and the IMF is one thing, and the private sector is something else. In the private sector we are not discussing anything at this time, and the talk about debt restructuring, the public debate unfortunately taking place in Greece, does harm to the country."

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