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GREECE


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 132,834 117,200 112,000 28
         
GNI per capita
 US $ 11,660 11,430 11,730 48
Ranking is given out of 208 nations - (data from the World Bank)

Books on Greece

REPUBLICAN REFERENCE

Area (sq km)
131,940

Population 
10,665,989

Capital 
Athens

Currency 
Euro

President 
Costas 
Stephanopoulos

Private sector 
% of GDP
over 60%

  

Background:
Greece achieved its independence from the Ottoman Empire in 1829. During the second half of the 19th century and the first half of the 20th century, it gradually added neighbouring islands and territories with Greek-speaking populations. Following the defeat of communist rebels in 1949, Greece joined NATO in 1952. A military dictatorship, which in 1967 suspended many political liberties and forced the king to flee the country, lasted seven years. Democratic elections in 1974 and a referendum created a parliamentary republic and abolished the monarchy; Greece joined the European Community or EC in 1981 (which became the EU in 1992). 

Update No: 084 - (29/04/04)

Greece's new prime minister, Costas Karamanlis, has personally taken charge of preparations for the Athens Olympics due in August. Karamanlis will head the culture ministry which oversees work for the Olympics, while several other senior members of his New Democracy party were named to key posts involved in the event.
New Democracy's number two, Yiorgos Souflias, aged 63, was named to the environment and public works ministry, which is in charge of key Olympic projects, such as the construction of a roof above the main Olympics stadium and the marathon track. New Democracy's spokeswoman for Olympic Games, Fani Palli-Petralia, was appointed alternate minister for culture and is expected to ensure day-to-day supervision of works under Karamanlis. 
Yiorgos Voulgarakis, aged 44, known as an efficient organiser, was named minister for public order, tasked with ensuring security during the Games. 
The appointments reflected the new government's commitment to ensure that the Olympic Games from August 13 to 29 are a showcase for the country. 

Goals of the new team
The aims of the new government's policy for the economy are very similar, as it so happens, to those of the previous Socialist Government: fast economic growth, lower unemployment, and convergence of wages and pensions with the EU average. It only vows it will do it better and that the previous government, not only failed to deliver on its promises, but presented an inaccurate picture of the state of finances. Finance Minister Alogoskoufis said, for example, that the 2003 budget will show a deficit equal to 2.7 percent of the country's GDP, instead of the originally forecast 1.4 percent, and added that GDP growth in 2003 was 4.2 percent rather than 5 percent. Alogoskoufis presented a set of specific goals for the government's four-year term: reaching an annual growth rate of 5 percent; lowering the unemployment rate by 2.5 percent; raising the employment rate from 56.7 percent to over 60 percent; and increasing pensions and wages to a level near the EU average within eight to 10 years. 
Beyond these aims, Alogoskoufis made a lot of general pledgees about better governance. He said that improved spending methods, a crackdown on tax evasion and high growth itself would generate, by the end of the government's four-year term, savings equal to 4 or 4.5 percent of GDP or "6.5 to 7.5 billion euros in today's terms." It is through these savings that major policy initiatives are to be funded. 
This is the usual wishful thinking expressed by every government in turn, and not just in Greece! This is especially so concerning the "crackdown on tax evasion." The fact is that, taking comfort in the present government's claims that it will abolish the financial crimes squad (SDOE), which it accused before the election of being a hornet's nest of socialist fanatics bent on harassing businesses, businesses are taking the hint and are evading paying taxes on a large scale, by refusing to issue receipts.
The scale of the phenomenon was already evident in the early days of the government's term. Deputy Finance Minister Adam Regouzas, a former tax inspector, alerted Alogoskoufis to the scope of the problem, which could substantially reduce government receipts. Subsequently, the government has toned down its rhetoric over SDOE and is now talking about "reforming" the agency. Regouzas himself has issued instructions to SDOE agents to stop making "police-style inspections" and "harassing" businesses. 
The instructions, however, go on to encourage the same agents to be "strict" in applying the law and imposing sanctions on businesses for issuing fake receipts or failing to issue them at all, concealing sales or trying to doctor cash register data. This shows that the first part of the instructions, about not harassing businesses, is purely for show, a practice that the present government, so far, has heavily relied on. 
Alogoskoufis also referred to the much-vaunted revision of state finances, claiming that it is already under way. While accusing the previous government of fiddling the books in good socialist style, he called on the opposition to cooperate with the government's economic policies "for the good of the country," adding that he will seek consensus for all reforms.

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BONDS

State bonds in impressive February trade: BoG report


Greek government bonds trading on the electronic secondary securities market (HDAT) in February, had a positive performance in line with the rest of the Eurozone bonds, a recent report issued by the Bank of Greece showed, New Europe reported recently.
Amongst the benchmark bonds, prices rose between 63 and 184 basis points, the report said. The 20-year benchmark bond (maturing on 22nd October 2022) recorded the highest price gains closing at 112.66 (with a yield of 4.85%) on February 27th compared to 110.82 (4.99%) on January 30th. The 10-year benchmark bond gained 154bps closing at 101.85 (with a yield of 4.27%) at the end of January. The average yield spread between the Greek and the German 10-year benchmark bonds was 22bps in February from around 20bps the previous month. Two new benchmarks were launched successfully during the month, the three-year bond (€1.8bn) maturing on 21st June 2007 and the five-year bond (€5.0bn issued through syndication) maturing on 20th April 2009.
Yields dropped considerably for all maturities and especially at the short end of the yield curve reflecting market expectations for lower interest rates in the near future. Three-year bond yields declined to 2.8% on February 27th from 3.01% at the issuance on February 4th while 20-year bond yields were at 4.85% at the end of February compared to 4.99% at the end of January.
Market turnover on HDAT was €51.38bn in February, increasing more than 9% with respect to February 2003 (when it was €47.04bn). As in January, investors' interest focused on medium to long-term maturity bonds that absorbed 66% of the overall volume. 

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CREDIT RATINGS 

Moody's affirms PPC's stable outlook

Moody's recently affirmed Public Power Corp's (PPC) Baa1 credit rating and stable outlook, New Europe reported.
The international rating agency includes in the list of strengths the company's dominant position, high entry barriers and improving financial profile. On the other hand, the tariff regime, which is subject to political considerations, possible rising competition and possible acquisitions are included in the list of challenges. The analysis said, "further debt reduction and sustainability of positive free cash flows could lead to a positive rating change," Moody's report highlighted. 
Significant debt funded investments or negative political developments affecting tariffs could result in downwards rating pressure. The rating agency also concluded that the recent interest in Bulgarian distribution companies is likely to be accommodated within the current rating level given the relatively small size of the potential investment (all three distribution packages are valued at €240m). The state power entity's rating and outlook was also affirmed by the Standard & Poor's agency (BBB+ rating and stable outlook).

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ENERGY

Booming oil product market emerges in Greece: IOBE

The Greek oil product market has risen steadily over the last 15 years, a survey by the Institute for Economic and Industrial Research (IOBE) said recently. Domestic consumption of oil products rose by 43% in the period 1985-2000, or an annual average growth rate of 2.7%, the report said, the Athens News Agency (ANA) reported.
IOBE said that oil products account for 70% of energy products in Greece, although this rate was declining steadily in the period 1985-2000 due to the slow process of replacing oil products with other forms of energy.
The dependence of Greek economic sectors from oil products was almost unchanged throughout this period, with the transportation sector accounting for 57.6% of total demand, following by industry (16.7%), households (16%), agriculture (8.5%) and services (1.5%).
The services sector recorded the biggest growth in demand for oil products in the 1990s in line with the sector's dynamic growth, followed by households and transportation, with growth rates of 46.4 and 23.6%.
According to the International Energy Agency, oil products will continue to dominate the country's energy balance in the current decade, with their share around 67% of total demand for energy products in 2010.
The report, however, said that the performance of domestic oil products production were "poor" based on current fundamentals, with not particularly favourable prospects. Greece's crude oil reserves are at around 9.0m barrels currently, the report said.
Export activity in the sector slowed significantly, with exports down 40% in 2001 compared with 1985, based on volume. The United States (20%), former Yugoslavia states (9.0%), Spain (6.0%), France (5.0%) and Lebanon (5.0%), were the country's biggest export markets.
Highlighting the sectors outlook, the IOBE report said, the oil refinery companies' financial outlook was positive, although financial conditions worsened for oil product distribution companies.

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PHARMACEUTICALS

Lavipharm gains sole majority in LAS

Pharmaceutical company, Lavipharm SA, recently announced it has reached an agreement for the acquisition of 40% of Lavipharm Alliance Sante SA (LAS) from Alliance Sante Distribution SA, a subsidiary of Alliance Unichem, New Europe reported recently. 
With this purchase, Lavipharm, which already possess 60%, will now own 100% of the share capital of LAS SA. LAS is a leading wholesale and distribution company of pharmaceuticals, cosmetics and healthcare products in Greece. With six distribution centres in Athens, Thessalonica, Patras, Ioannina, Larissa and Kavala, its turnover in 2003 exceeded €152m. "This purchase, in combination with the recent sale of its participation in Lavicosmetica, constitutes an integral part of Lavipharm's strategic development plan with the aim of further strengthening its entrepreneurial objectives and redirecting its investment portfolio in order to achieve significant capital gains, future growth and enhancement of its presence in the domestic pharmaceutical market," a group statement said

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