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GREECE


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 173,000 132,834 117,200 27
         
GNI per capita
 US $ 13,720 11,660 11,430 45
Ranking is given out of 208 nations - (data from the World Bank)

Books on Greece

REPUBLICAN REFERENCE

Area (sq km)
131,940

Population 
10,647,529

Capital 
Athens

Currency 
Euro

President 
Costas 
Stephanopoulos

Private sector 
% of GDP
over 60%



Update No: 093 - (28/01/05)

The EU on the Greek economy
Greek Minister of Finance Giorgos Alogoskoufis was in Brussels on January 17th to attend the Eurogroup and ECOFIN meetings in which the EU Ministers of Finance were to discuss the European Commission proposal on the adoption of further measures by the Greek government, aimed at bringing the Greek public deficit below 3% of the GDP, in line with Euroland requirements.
Both Eurogroup and ECOFIN adopted the Commission's proposal, based on which the Greek moves aimed at cutting the deficit were neither appropriate nor adequate. A European Union investigation has found that Greece broke the eurozone's critical deficit ceiling of 3% of GDP every year since 1998, contrary to the earlier claim that it stuck to the rules. The European Commission said that there was no legal basis to throw Greece out of the single currency, which it joined in 2001 on the back of the grossly misleading deficit data.
Greece is likely to escape expulsion from the euro, even though it has been revealed that Athens gave false deficit figures to enable it to join the single currency. That was under the previous Socialist Party (Pasok) government, voted out last March. The new government of Costas Karamanlis's New Democracy cannot be blamed, since Karamasnlis and his supporters wee strongly critical of Pasok profligacy at the time.
The EU, nevertheless, raised the pressure on Greece on January 18th, saying it faces a hefty fine because its 2005 budget deficit will be 3.6 percent of gross domestic product - well over the maximum 3 percent allowed under the stability rules of the euro. 
EU Finance Commissioner Joaquin Almunia is to recommend austerity measures for Greece that must be approved by the EU finance ministers. Never since the euro came into circulation in 2002 has the EU gone so far in taking legal steps against a violator of the currency's stability rules. 
In 2003, it took on France and Germany for running excessive budget gaps. However, the two countries resisted, rallying a majority of EU nations around a declaration saying Paris and Berlin will get their deficits under 3 percent of GDP by 2005. Although it successfully challenged that in the EU high court, the European Commission then effectively abandoned legal steps against France and Germany. 
Last year, the European Commission put Greece's budget deficit at 5.5 percent of GDP after learning Athens had provided flawed statistics about its economic performance in the years leading up to the introduction of the euro in 2002. While the Greek deficit is declining, Almunia thinks that it will still exceed the 3 percent of GDP ceiling in 2005. 
In a statement, issued on the second day of their regular monthly session, the EU finance ministers blamed Greece's large deficits on dubious statistics, cost overruns in the 2004 Olympic Games and other spending areas as well as "shortfalls in certain revenue items." 
Already last December, Almunia predicted Greece would fail to bring its deficit to under 3 percent of GDP despite the fact it has one of the highest growth rates in the EU. Greece has said its deficit in 2005 will amount to 2.8 percent of GDP, a figure its EU partners dismiss as optimistic. 
However, Greece could yet face EU penalties in the wake of the most serious statistical irregularities since the launch of the euro. José Manuel Barroso's new Commission must decide whether to seek fines against Greece in the European Court of Justice; it can also withdraw regional aid worth more than €500m a year, or take other action under the stability and growth pact if the high deficit continues.
The revelations are embarrassing for Greek policymakers, including Lucas Papademos, the vice-president of the European Central Bank, who was Greek central bank governor at the time of Greece's entry into the eurozone. It appeared that Greece would attempt to stave off punishment from the EU by pointing to tougher accounting criteria that had been applied to Greece retroactively and which were not applied when other countries were joining the euro.
Nicholas Garganas, governor of the Bank of Greece, said in an interview with the Financial Times that the methods used to measure deficits had been altered. "I don't think that the people of Greece and Europe were misled," he said. "It is not really fair to draw such conclusions when we know that since 2000 the method of preparing, or calculating, budget deficits has changed."
Eurozone finance ministers, meeting in Brussels, picked over the Greek scandal, hoping to draw lessons on how to rebuild confidence in the EU's financial data. The revelations have embarrassed EU leaders, with Jean-Claude Trichet, president of the European Central Bank, describing them as "an enormous problem".
A team of investigators from Eurostat, the EU's statistical arm, showed that in 1998 the deficit was 4.1 per cent of gross domestic product, compared with 2.5 per cent reported by Greece. In 1999, the final year taken into consideration when the country joined the euro, the revised figure was 3.4 per cent, compared with the official 1.8 per cent.
Eurostat had already reported how Greece consistently gave false figures in subsequent years, culminating in the claim in 2003 that its deficit was 1.7 per cent, when it was 4.6 per cent. The distortions have been attributed to a number of causes, including the mis-recording of military expenditure and the treatment of a social security fund.

PM mulls action to restore ND unity 
Costas Karamanlis is preparing to go on the offensive in a bid to wipe out internal wrangles within New Democracy, caused by opposition to certain government policies from some MPs, party unionists and hardliners, sources close to the prime minister told Kathimerini.
The ongoing dispute, as of January, involving cotton farmers, who are threatening to blockade roads around the country if the government does not buy up their excess produce, has brought the issue to the fore. Many leading officials in the ND union (DAKE) are opposed to the government's refusal to give in to farmers' demands.
New Democracy Secretary Evangelos Meimarakis has hinted at the possible expulsion of some members from the party. However, sources indicate that polls conducted on behalf of the Maximos Mansion suggests that the government may be better off by refusing to be drawn into a public slanging match with its internal critics. The theory seems to be that the more the unionists and others criticize, the more it dispels the impression in the mind of the public that New Democracy is simply satisfying the demands of its "own boys" and not serving the greater good.
The approach to the dissention among MPs, however, is likely to be very different according to sources. The prime minister is said to be unwilling to accept such deviations from the party line and may take steps to tackle the problem.

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MINERALS & METALS

Talks to sell Aluminium begin

Canadian aluminium giant Alcan Inc announced recently that it has launched exclusive talks with Greek group, Mytilineos Holdings SA, for the potential sale of Alcan's interest in Aluminium of Greece SA. "The consideration of a possible sale of Alcan's controlling interest in Aluminium of Greece is part of our ongoing efforts to identify and develop value creating options," said Cynthia Carroll, president and CEO of Alcan Primary Metal Group. "We are confident that the positive outcome of these discussions would contribute to Aluminium of Greece's long-term sustainability," she added. The shared objective of the parties is to finalise the terms and conditions of the proposal.

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TELECOMMUNICATIONS

OTE ready for full privatisation

Hellenic Telecommunications Organisation (OTE) is ready for a full privatisation but any development in this process depends on the government, ANA quoted Hellenic Telecoms' Chairman and chief executive, Panagis Vourloumis, as saying recently. Speaking to reporters at a news conference, Vourloumis said an early retirement programme launched by the organisation's board was facing certain problems but a dialogue with employees was continuing. He stressed that broadband services was a top priority for Hellenic Telecoms and noted that a procedure to transfer the shares of Bulgarian and FYROM mobile telephony operator subsidiaries to CosmOTE was currently under way. Vourloumis added there were no plans for OTE to absorb CosmOTE.

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