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5HJXODWRU\5HIRUPV6WUXFWXUDO&KDQJHVDQG3ULYDWLVDWLRQLQ*UHHFHGXULQJ V ,%DFNJURXQG During 90s, for the fist time in post-war history, Greek strategies for economic development shifted markedly reliance on market forces rather than on state-managed growth.
In the pre-1974 period Greece’s state-led development strategy based on import substitution and credit allocation produced strong growth (7% with manufacturing on the average at 11.4% annually), combined with low inflation (4%) and small balance of payments deficits (2.1% of GDP) until 1974.
From 1974 until 1995 the economy showed a completely different picture. GDP annual growth rate averaged 2%, manufacturing growth slowed to almost zero, annual inflation averaged 18%, and the average external deficit, as a share of GDP, doubled. This performance was much worse than that of its neighbors and the other countries of the European Union (EU). The economic slowdown can be attributed almost completely to two major factors, namely the decline in the share of total investments in GDP, and the decline in the productivity of new investments. In an environment which had led to a downward spiral in economic performance, ultimately resulting in crisis (of slowing growth) and many large private firms that had grown rapidly in the favorable pre-1974 environment became “problematic” (these companies had huge debts to state banks which led to the de-facto nationalization of them, were not allowed to close due to a policy of preserving jobs, while a new corporation was building up in 1983, the so-called “,QGXVWU\ 5HFRQVWUXFWLRQ &RUSRUDWLRQB,52”, to manage the take-over of ailing private corporations by the public sector)
Structural reforms as we will develop them, in detail, in the next paragraph, started timidly in the early 90s with important changes to financial and labor market regulations, some product market liberalization, and initial steps in state reforms. Initially were stimulated by the need to comply with EU regulations and EMU criteria, but have accelerated after 1994, and currently form one of the new government’s important policy objectives for the next period.
Experience in other countries has shown that broad regulatory and structural reforms, along with supportive macroeconomic and labor market policies can provide an appropriate framework for stipulating both supply and demand.
2
The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD.
This happen and with Greece, which the macroeconomic fundamentals over the last decade achieved, comfortably, the five Maastricht criteria for membership to 11-member Euro-zone area (EMU), at GRD/EUR of 340.75, by the target date of January 1, 2001. Entry to Euro-zone area marked an important milestone in Greece’s efforts for greater stability and improves growth prospects.
As illustrated in the following table 1, Greek economy during 90s grew wit a numerical average GDP growth rate 2.7% surpassing the E.U average (2%) Activity is being led by high rates of investment, higher than the E.U average public and private sector investment finance to a large extent by the E.U Structural Funds. Fiscal disciplines had as a result the fiscal deficits, as a percentage of GDP, to decrease by 13,8% units (the deficit has been reduced from 13,6% of GDP in 1993 to a level of 0,2% in 2001). The general government deficit to GDP ratio is forecast to decline further in subsequent years falling well as much as 0.5% of GDP annually. The inflation rate (CPI) has been brought down from near 14,4% to around 3,0% in 2001 and was reduced by almost 11% units (14,4% in 1993 and 3,0% in Dec.2001).
3
Table 1. 0DLQ(FRQRPLF,QGLFDWRUV *UHHFH(XURODQG2(&' Ã Ã Ã Ã Ã Ã Ã Ã IÃ IÃ *'3ÃJURZWK È\HDU Ã 0,2 2,2 2,0 2,4 3,5 3,1 3,4 4,1 4,0 4,4 -*5((&(Ã -0,8 2,4 2,4 1,4 2,1 2,8 2,5 3,4 2,3 2,1 -(XURODQGB$YHUDJH 0,0 2,4 2,7 1,9 2,6 2,7 2,1 3,4 2,0 2,1 -OECDEurope Average ,QIODWLRQ È\HDU Ã -*5((&(Ã 14,4 10,9 9,3 8,5 5,4 4,5 2,1 2,9 3,1 3,5 3,9 3,1 2,9 2,4 1,8 1,3 1,2 2,3 2,1 1,5 -(XURODQGB$YHUDJH 6,2 8,3 5,7 6,0 5,8 3,9 3,9 3,7 4,4 3,1 -OECDEurope Average ,QYHVWPHQWV È\HDU Ã *5((&(Ã -3,5 -2,8 4,2 8,4 7,8 11,8 7,3 8,1 9,0 9,5 - -7,5 2,0 2,5 1,6 2,5 5,1 5,2 4,7 3,3 2,6 (XURODQGÃ$YHUDJH -4,8 1,7 3,2 2,7 4,0 5,6 4,1 4,9 2,3 3,0 OECDEurope Average 4*HQ¶O*RY¶WÃ )LQ¶OÃ
'HILFLW (%GDP) 13,8 10,0 10,2 7,4 4,0 2,5 1,8 0,9 0,0 0,7 Ãà -*5((&(à 5,9 5,4 5,3 4,4 2,6 2,2 1,3 0,1 1,0 1,2 (XURODQGÃ$YHUDJH 6,3 5,6 5,3 4,2 2,3 1,6 0,6 0,6 0,3 0,6 OECDEurope Averageà 5**3XEOLFà 'HEWÃ
È*'3 111,6 109,3 108,7 111,3 108,3 105,5 104,6 102,7 103,0 102,2 -*5((&(Ã 70,2 72,7 76,3 77,5 76,9 75,2 74,4 72,1 69,9 68,4 -(XURODQGB$YHUDJH 66,6 68,9 71,9 72,7 71,8 69,8 68,6 66,2 63,8 62,4 OECDEurope Average 7. 8QHPSO5DWH È Ã 9,7 9,6 10,0 10,3 10,2 11,2 12,0 11,3 10,8 10,0 *5((&(Ã - 10,9 11,7 11,4 11,6 11,7 10,9 10,0 9,0 8,6 8,6 (XURODQG$YHUDJH 10,4 10,7 10,3 10,4 10,1 9,3 8,5 7,7 7,3 7,3 OECDEurope Average :DJH*URZWK È\HDU Ã -*5((&(Ã 8,7 11,7 14,7 10,6 10,2 9,3 4,9 4,3 4,5 5,0 (XURODQG$YHUDJH 3,2 2,9 3,7 3,2 2,9 2,4 2,4 2,1 2,4 2,4 3,2 3,0 3,6 3,2 3,1 2,9 2,8 2,6 2,9 2,8 -OECDEurope Average
,QGXVWULDOÃ3URGXFWLRQà ÃÃÃÃÃà È\HDU à -*5((&(à -2,9 1,1 2,1 1,2 1,0 4,3 0,6 5,4 4,3 4,0 (XURODQG$YHUDJH -4,3 5,2 3,4 0,1 4,1 4,4 1,9 4,8 1,5 1,6 -OECDEurope Averageà -3,0 5,5 3,3 0,4 3,6 3,6 1,6 4,3 1,5 1,4
Ã&RPSHWLWLYHQHVVà D5HODWLYHà 8QLWà /DERXUà &RVWVÃà à Ãà -*5((&(à 87 93 100 102 106 101 104 98 98 98 (XURODQG$YHUDJH 101 99 100 102 99 100 100 95 97 100 -OECDEurope Averageà 101 99 100 102 103 107 106 103 104 106 à 7HQà 4 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. Interest rates on the long-term government bonds (i. e interest rate on bonds with 10 year to maturity) have also declined considerably, and it brought the average rate in March of 2000, in the level of 6.2 % which was below the reference value 7.2%. The debt ratio to GDP following a sufficiently declining trend (the relative small reduction of debt ratio is mainly due to the assumption of public corporation’s debt by the central government in the context of restructuring), although still is over the Maastricht criterion, which is 60% to GDP. It should be noted that the downward trend in the debt ratio is set to strengthen in the following years due to considerable privatisation proceeds as WKH WDEOH in the statistical annex indicates. As to the stability of the exchange rate criterion, the smooth participation of the drachma in the ERM and the improving economic fundamentals put Greece in a strong position to satisfy this criterion It has to be noted that the relatively high growth rates of the last several years allowed the improvement of the wage earners disposable income almost by 1,5% per year on the average for the period 1993-1998. The reduction in the tax burden for wage and salary earners envisaged in the 2000 budget will improve their disposable income even further. We should not ignore that productivity in the labor market has improved dramatically during the 1990s growing on the average by 3%-3.5% annually in the period of 1999-2000, 1.4% between 1994 and 1998 compared to only 0.1% between 1981 and 1993. According to the Stability and Growth Programme 2000-2004 labor productivity is expected to continue growing at the rate of period 1999-2000, while the implied increase in the XQLW ODERU FRVW for the whole economy is put at less than 1,5% which is compatible with the corresponding European averages. Rapid growth is likely to continue over the next few years, spurred by public and private investment induced by continued large capital transfers under the EU’s third Community Support Framework (CSF), by the prospect of low inflation and low interest rates following EMU membership, and by preparations for the 2004 Olympic games. Solid growth should reduce the transition costs of adjustment, and provides a good opportunity for Greece to push forward with substantial supply-side reforms. II. 6758&785$/ DQG 5(*8/$725< 5()2506 As it is well know structural reforms have become increasingly important for meeting the challenges by slow output and productivity growth and unacceptably high unemployment rates. Macroeconomic policies have been able to respond only imperfectly to these problems. Well-designed and implemented structural changes across a wide range of areas-markets could have significant positive effects on growth and jobs. To reap those gains macroeconomic policies need to be set appropriately. 5 Structural reforms started in Greece timidly in the early 1990s, stimulated by the need to comply with EU regulations and the EMU criteria, but have accelerated after 1994, and currently form one of the new government’s important policy objectives for the next four years The Greek Government in order to secure the participation of the drachma in the EURO - area on 1st January 2001 and to promote real convergence with the Member States in the European Union, has been introduced a rapid progress in structural reform, in the following areas: a. )LQDQFLDO DQG &DSLWDO 0DUNHWV UHIRUPV The financial sector has seen the largest liberalization, with competition and economies of scale inducing mergers and restructuring. Financial Markets liberalization started in the mid-1980s in the context of the stabilization program (1988) and was intensified after 1990 in response to the need to comply with the plans for European economic and monetary integration, and the entry of the drachma in the Exchange Rate Mechanism (ERM) of the EEC. In the late 1980s, interest rates were liberalized, credit controls and interest rate subsidies were reduced, government bond sales to the public were introduced, and the stock exchange law was modernized. In 1992, a law incorporating EU banking directives was adopted, and by 1994 liberalization of banking was complete. Dematerialization of tradable securities in the Athens Stock Exchange (ASE) (law 2198/94 made possible the dematerialization of Treasury fixed-income securities in order to eliminate settlement delays, while Law 2396/96 made it possible for equities) improvement of disclosure rules (the Code for Corporate Governance in Greece was published), initiation of the operation of the Athens Derivatives Exchange (ADE-is a separate company in which the ASE is the single largest shareholder) and a better regulatory framework were introduced in the 1990s, and a securities and exchange commission (Capital Market Commission-CMC) was instituted to oversee the stock exchange. Capital movements were liberalised in late 1990s. Foreign investors may freely buy and sell securities listed on the stock exchange and are allowed to repatriate the capital invested in securities plus any capital gains and dividends resulting from their investments without any restrictions. The banks’ obligatory investment in government paper (as a percent of deposits) was gradually reduced from 40% in 1990 to 15% in 1992, and eliminated in 1993. This forced the public sector, which 6 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. had traditionally privileged access to scarce financial resources, to compete on equal terms with the private sector for funds. The obligation of banks to earmark funds for loans to small and medium sized industries was abolished. Consumer credit was largely liberalized in 1992, and interest rates were liberalized. Controls on foreign capital current transactions were liberalized in 1992, and long-term capital movements were also liberalized in 1993. The largest bank, the National Bank of Greece (NBG) has written off all its doubtful debts, and the Commercial Bank of Greece has increased its capital through the sale of Ionian Bank to Alpha Credit Bank, and is seeking a strategic partner (already has formed an alliance with Credit Agricole of France). The two largest specialized banks of the public sector the Hellenic Bank for Industrial Development (ETVA) and the Agricultural Bank of Greece (ATE) have been slow in restructuring because of the large number of bad loans, and unprofitable companies in their portfolios. Both have required substantial injections of recapitalization funds from the budget. Deregulation has improved performance of all banks, but the interest rate spreads for short term rates still remain at 7% (see table in page 17), which reflect high costs, and is twice the spread of Euro area banks. According to a study by the Hellenic Bank Association, deregulation has enhanced the growth of output of banks, and has increased employment. The negative impacts on employment from structural changes (new technologies, mergers and acquisitions, introduction of the Euro as the single currency) are estimated to have been small. Financial liberalization has influenced positively the Athens Stock Exchange (ASE) which has exhibited spectacular growth in market capitalization (the total value of shares sold through the ASE in 1999 was GRD 1.62 trillion or EUR 4.77 billion by means of public offerings and GRD 2.77 trillion or EUR 8.15 billion by means of share capital increases), the number of account holders, and financial returns. This has provided wider opportunities for private firms to raise capital, and restructure. Despite significant fluctuations in stock market prices in the last three years, that are due largely to the thinness of the market, the improvement in the regulatory framework, such as the dematerialization of securities, and the rules about information disclosure have enhanced confidence and investor safety. Within the year 2000 (Law 2733/99 on the institution of the New Market in the ASE), a new stock market for new and innovative small and medium sized enterprises (NEXA) are allowed to raise equity finance (it will being open to some 7,500 SMEs). Another important development was the establishment of the so-called 1HZ (FRQRP\ )XQG (TA.NE.O) inline with the article 26 of the Law 2843/2000 (its capital is estimated in GRD 150 billion and was derived from privatisation revenues) for enterprises of the New Economy. The fund will support venture capital funds in their investment in SMEs that have a high growth potential and are active in the fields of the new knowledge-based economy. 7 Another important development is that Greece, in line with developments in other European countries as far as the review of regulations of the financial sector concerns, is considered the possibility of creating a unified regulator combining the supervision of banking, capital markets insurance and pension funds. A committee of experts has been established and a draft law will be prepared by the end of the year 2001. Furthermore, the Capital Markets Commission (CMC) will carry out a comprehensive study for the cost of compliance. b. 7D[ 5HIRUPV There have been several areas of simplification and improvements of transparency of the tax system. First, considerable effort has gone, and is ongoing, towards better information of the public concerning the tax laws, procedures, and forms. Telephone, as well as the Internet, has already been utilized towards this end, by establishing special numbers and sites. The ministry of finance has established collaboration with the Internal Revenue Service (IRS) of the United States with the purpose to improve tax administration and tax collection. Studies have been completed concerning the efficiency of several taxes (cost of implementation versus revenue), and the many (about 1000) taxes that are not part of the general budget, but are collected by third parties and directly given to various entities. The idea is to eliminate or consolidate many of these small taxes, and this is planned to take place in the near future. Considerable effort has gone into computerizing of various tax administrations, such as the income and value-added taxes, and the customs taxes. The newly instituted unit for the pursuit of economic crimes (SDOE) is being modernized with information systems Tax-related compliance burdens are expected to improve (could reduce tax rates on both capital and labor) considerably with the completion of the Integrated Taxation System (TAXIS), a computerisation programme which aims at speeding-up procedures and reducing costs by “de-materialising” (through fax, Internet and mobile phones) the contacts between citizen and the administration. A new law, which recently ratified by the Parliament, reduces personal and corporate income tax rates. The cost of the package is around 0,4% of GDP for 2001, 0,25% of GDP for 2002 and less than 0,1% of GDP for 2003. The measures aim to alleviate the tax burden, to increase business activity and labor supply and thus to bust economic activity. F /DERU PDUNHW 8 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. The labor market in Greece is dual and segmented with only about half of the employed being in formal wage jobs, the rest being self-employed. About 25 percent of the formal wage employment is in the public sector or public enterprises. The formal labor market is characterized by rigidity of the real wage demands of unions, and slow adjustment of the demand for labor. The second aspect is largely due to the institutional and regulatory framework of the labor market, in particular the high cost of labor dismissals, and the general employment protection legislation (EPL). The most recent OECD comparative analysis of EPL revealed that among 20 OECD countries Greece has the 19th most stringent EPL. Labor market was liberalized, with wage bargaining been concluded since 1991 without government interference. Several labor market rigidities were eased, such as the lifting of impediments to part-time work *UHHFH VWLOO KDV WKH ORZHVW VKDUH RI SDUWWLPH HPSOR\HHV LQ WKH 2(&' DERXW 1 the imposition by law of strict limits on wildcat strikes, the reduction of off-season allowances for construction workers, the lengthening of the work period that gives right to a pension, etc. Measures aimed at enhancing the flexibility of the labor market have been introduced the last years. In particular, in 1998 the parliament adopted legislation concerning: x The annualisation of working time, which allows more flexible use of working hours without extra costs, x The introduction of part-time work in the public sector x The strengthening of the wage bargaining process at the local and company level at the expense of sectoral level in areas of high unemployment. This implies that sectoral agreements, usually the cause of large wage drift, are not binding in areas of high unemployment, x The elimination of restrictive labor practices in public corporations to ensure higher flexibility and productivity, x The legitimisation of private labor (job-seeking) offices. Labor market policy has changed under the National Action Plan (NAPs) for employment for 1999 and subsequent NAPs, in favor of more training, a better job placement system, better professional orientation for new entrants in the labor market, tax incentives for enterprises, local employment pacts, and others. A year-2000 law prescribes that the maximum number of people that can be fired each month is 4 for companies that employed, at the beginning of the month, 20-200 workers and 2-3% of the labor force for larger companies, with the condition that the maximum number will never exceed 30 workers. 9 The legalization of illegal immigrants was done in two phases, the first involving simple registration that took place between January and May 1998, while the second, ending in April 1999, involved the provision of more permanent stay for those immigrants that supplied the required papers. Despite the minimal requirements for registration and permanent residence, about 380000 illegal immigrants registered during the first phase, out of the estimated 500-600 thousand illegal residing in Greece at the time, and only 60% of them (225000) completed the second phase. The major restraining factor was the provision that social security had to be paid by the employers of legalized immigrants. The low degree of legalization of illegal immigrants, who operate largely in the unskilled labor market, coupled with the requirement that they pay social security implies that there is considerable elasticity of demand for low skilled workers at lower wages. At the same time a first move to restrict work to 35 hours per week is currently under trial by the Hellenic Bank Association in some 50bank branches. According to the most recent update of the government’s convergence plan (for 2000-2004), better job matching between employers and employees is being attempted by modernizing the employment centres to monitor flows, and by establishing career centres in higher education institutions. Further reform is needed, however, as Greek employment protection legislation (EPL) is still very stringent by international standards. G 3URGXFW PDUNHW Deregulation in several product markets took place, during 90s. Examples are the abolition of price controls and profit margins for many products, the deregulation of the bakery trade, the liberalization of price setting in standard petroleum products, the freeing of shopping hours for retail outlets, the abolition of the monopoly of the Post Office (in express mail), the curtailment of the monopoly of Hellenic Telecommunications Organization (OTE) in mobile telephony, and the lifting of the monopoly of Olympic Airways in domestic flights. (EU directive 96/67 introduced a common aviation area in the EU with uniform requirements for entry, markets structure and fares; so 14 airline companies and 8 air taxi companies currently operate in Greece, domestic competition has intensified, fares have been deregulated and have become lower, employment in the whole industry increased as a result of new entrants and efficiency of service provision has improved) In late 2000 positive steps were taken to strengthen the competition policy and so the Competition Committee (CC), which is responsible for safeguarding healthy competition, enforcing (under the articles 81 and 82 of EU treaty) the prohibition mainly against horizontal agreements (merger control provisions). 10 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. Although consumer protection is consistent with EU norms still there are problems with effectiveness of their enforcement and in some cases with the transposition of EU norms into local law. In some markets and particular in the sector of SURIHVVLRQDO DFWLYLWLHV there are administrative barriers to entry resulting to oligopolistic situations, hampering SURIHVVLRQV on domestic competition and consumer welfare. For the purpose to promote wide-scale liberalizations in this sector (over 90 professions), in particular with respect to quantitative restrictions, price setting and artificial creation of demand, a cabinet sub-committee was set up, in order to implement the reforms for the most important professions (lawyers, notaries, accountants, appraisers, engineers, taxi and track sectors). It is estimated that a reassessment and/or abolishment of certain regulations in the area of professional services will benefit the national economy with a 1,2% increase of GDP. e. 3HQVLRQV DQG +HDOWK FDUH UHIRUPV Pension reform is a major issue not only in Greece but also, practically in every European country. The way the system operates now creates a lot of uncertainty as to how pensions will be funded in the future, where people live longer and want to work for a longer period of time. The Greek pension system faces serious difficulties because the unfunded liabilities and a rapid decline in the dependency ratio that is necessary to support continued generational solidarity under pay-as- you-go systems. In 1999 the total spending for social security, including pensions, health care, unemployment insurance, etc. amounted to 19.7 percent of GDP. The introduction of several generous pension measures during 1978-85 and the microeconomic incentives that are part of the system have resulted in pension expenditures to surge from 6 percent of GDP in the mid-1970s to 13.2 percent of GDP in 1999. Simulations by OECD suggest that the present value of the net pension outlays (gross outlays minus revenues from contributions) is 196% of 1994 GDP, a ratio much larger than that of all other OECD countries. On the other hand public expenditure for health has gradually risen to account for 5% of GDP, without major improvement in the level of service. Both of these are areas of critical importance, where structural reforms are urgently needed. Pension reforms introduced in 1992 called for the funds to be financed 2/9 by employers, 4/9 by workers and 3/9 by the state. After that a “small reform package” was passed in January 1999 (Law 2676/99) that aided at the consolidation, unification or abolition of some 60 funds, and introduced the following measures. 11 x Penalties to contain the widespread evasion of social security contributions, x The merger of various complementary social security funds, x Additional measures to contain administrative, pharmaceutical and diagnostic costs, x Measures which impose limitations on the ability of pensioners to be employed, and x Consolidation and simplification of the legislation concerning pension fund management, aiming at reducing evasion of contributions (such as the legalization of immigrants, the introduction of labor inspectors, and the obligation of enterprises to keep registers of newly hired workers). The law also limited the ability of pensioners to be employed, but it is not clear how this can be enforced. It also allowed pension funds limited freedom to manage their funds more profitably by investing up to 20% (23% from January 2001) of their assets. However, these reforms do not deal with the fundamental problems of the pension system, which are the easy and porous eligibility requirements, its generosity, and the high replacement rates. It should be reminded that the legitimisation RI LOOHJDO IRUHLJQ ZRUNHUV and the payment of their social security contributions have already been legislated. In early 2000 the government has commissioned a major study that is supposed to analyze and propose viable alternatives to the present system. The results are expected in the year 2001. Fundamental reform of the social security system has been deferred to after the 2001, after the social dialogue which will follow the study of the sector. A radical reform of the health care system has been designed (“Health for the Citizen”), over a six- year horizon, to reduce spending by 10% a year in nominal terms while at the same time improving services. Hospitals will cease to be legal units and instead will become “self sufficient administrative units”. The intention is to make hotel side of hospital care comparable in the public sector to those in the private sector. A single financing agency will be established, the Organization for the Management of Health Funds (ODIPY) which will collect and manage the medical care portion of the social security funds. It will purchase primary hospital services from the National Health Service (ESY) hospitals and the private sector on the basis of quality and cost. I 3XEOLF DGPLQLVWUDWLRQ UHIRUPV WR HVWDEOLVK D JRRG UHODWLRQVKLS ZLWK WKH PDUNHW 12 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. This is the area that is generally regarded as needing the largest reform, as it influences almost every aspect of the Greek economy (market and society as a whole). The capacity to perform proper regulatory functions depends on the efficiency of administration, and this is generally rather low. Low salaries, very inadequate incentives, rigid labor regulations, in addition to security of employment and advancement, have lowered the capacity of the Greek administration to enforce the ever-expanding set of laws and regulations. Parallel systems that have been instituted in some areas in order to substitute for public sector inadequacies have not been able to overcome the gross inadequacies. Concerning the reform of public administration, the major effort in the last few years has been decentralization. More than 1100 competencies (for issuance of certificates, etc. have been transferred to the offices of the governors of the provinces (nomoi). In efforts to reduce bureaucracy the ministry of public administration has compiled FLWL]HQ¶V JXLGHV for several areas of public administration, such as the issuance of pensions, various permits, etc., including rights and duties of citizens. Furthermore, simplification of procedures has been implemented in several areas, by reducing the number of forms needed for several procedures, and simplifying the format of many forms. For instance over 300 forms that comprise about 75 percent of all forms used by citizens, have been simplified. Convenient telephone numbers for the information of citizens, as well as for the request of forms have been established for several ministries, and the Internet has started being utilized for informing citizens, as well as the submission of some forms. This is to be enhanced with the passage of a decree concerning the recognition by the state of electronic signatures. Computerization of many administrative divisions, such as the management of public property, the civil servant’s pension fund is in the process of implementation. All these are welcome measures that will certainly reduce the time spent by citizens and other agents in bureaucratic procedures. Another development has been the establishment of compensation committees, for citizens that lose through the delays of various ministries. The relevant law provides for compensation of up to 200 000 drachmas for losses incurred. Finally a code of ethics for civil servants has been compiled and is to be formalized soon. Modernization and restructuring of local government have been a major reform since late 90s. An ambitious programme concerning the merger of numerous public organisations and hundreds of local authorities known as “Kapodistrias plan”, was launched in an effort to realize substantial cost savings and offer better services to the population. 13 A new public management programme called “Quality for Citizen” was launching in 1998 and a new comprehensive programme for the reform of the public administration called “SROLWLHD´ aim to reduce administrative burden imposed to citizens. To combat regulatory inflation and update older regulations, review and evaluate existing regulations a new law that is called «the law of the laws» is going to the Parliament To help market openness and to boost Foreign Direct Investment (FDI) one-stop shops for citizens at regional levels for services of social security, agricultural developments and commerce were set up and a special one-shop stop for foreign investors called ELKE had opened since 1996 to provide information about requirements for starting new large investments in Greece. It is intended that the programme be extended to all prefectures in the near future. Law 2516/97 simplified industrial licensing procedures by synchronizing industrial development and environmental protection. It consolidated permits for establishment of industrial activities into a single license issued by the regional department of the Ministry of Development in each Prefecture. To simplify more the problems the Ministry codified all requirements and displayed them on the Internet with an interactive guide to help applicants in filling them out online. The reforms Greece has implemented, which have focused on economic and financial liberalizations, have enabled the economy to take advantage of the benefits of globalisation while minimizing the risks inherent in this process. The reforms-which have included trade and capital liberalisation, increased private sector participation in key sector of the economy, tax reforms, changes in the labor market structure, capital market liberalisation (medium and long term capital movements were fully liberalised in 1993, while most restrictions on short-term capital movements were lifted in 1994 and liberalisation was completed in 1997), price controls have been almost fully abolished, and “mini” pension system reforms- have transformed a closed heavily regulated economy with high government intervention into an open, market-driven economy. ,,, 35,9$7,6$7,21 The primary role of structural reforms is to make the economy more efficient and to promote a much more rapid and employment –intensive-up process. Structural reforms have been most visible with 14 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. regard to privatization and privatization is considering as one of the main pillars of structural reform that enable economy to modernize and to grow. Greek privatisation programme has been undertaken to reduce the dominant role of government in the economy. Privatisation in Greece started in the early 1990s and the title of the relevant law was (2000/91), “on denationalisation, simplification of liquidation procedures strengthening the rules of competition and other matters” We must point out that the privatisation programme has required considerable planning effort and determination. Several institutions had to be transformed to public companies with shares. Furthermore, social security and pension arrangements had to be made and considerable restructuring was implemented. In several enterprises a break up between an assets and an operations company is envisaged in the run up to privatisation. A start was made towards the reorganization of the public sector. The major policy was privatization of several publicly owned companies and liquidation of non-viable firms owned by state banks or other state entities. However, implementation was slow as the commercial worth of many companies was low, the stock market climate was not favorable, and the bureaucratic procedures inherent in privatization were cumbersome and unclear. Furthermore, there was considerable reluctance and opposition of state agencies to relinquish control of companies they controlled, and strong opposition by workers. $ 3ULYDWLVDWLRQ SURFHVV LQ *UHHFH Greek privatisation process faced three categories of state-owned enterprises x Privatisation of public enterprises belonging to business sector- the restructuring of “ailing firms”, that were gathering in the Industrial Recostruction Organisation (IRO), and the transfer of them to the private sector. x The sale of enterprises owned by state- controlled Banks and the banks themselves, and x The privatisation of public enterprises-public utilities 3ULYDWLVDWLRQ RI ,QGXVWULDO (QWHUSULVHV ,52 $LOLQJ (QWHUSULVHV 15 Greek state had acquired, since 1983, interests in a large range of companies (almost 100) whose it had de facto nationalized, as a means of rescue-to reconstruct and run around- from financial difficulties and particularly from the huge debts to the state banks. These were grouped together under a state Agency (IRO or OAE) charged with restoring them to profitability and subsequently selling the businesses back into the private sector, where possible, or otherwise liquidating them. A large number of small and medium size companies were sold (or dissolved) by the IRO. The Organisation itself has been put into liquidation. Table: 5HYHQXHVVHOOLQJ,52 35,9$7,6$7,21 5(9(18(6 LQ 0686$ 727$/ 727$/ $,/,1* 34,9 73,5 44,4 28,2 15,2 196,2 1RWH 6HH 7DEOH LQ WKH 6WDWLVWLFDO $QQH[ ZKLFK LOOXVWUDWHV E\ FRPSDQ\ WKH UHYHQXHV URVH VHOOLQJ WKH HQWHUSULVHV WR WKH SULYDWH VHFWRU The total amount raised by selling the IRO enterprises is, as the above table indicates USA $ 196.2 million which is equal to 1.5 % of the total privatisation revenues raised for the period 1992-2000. 16 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. 3ULYDWLVDWLRQ RI VWDWH FRQWUROOHG EDQNV: Before 1987, state-controlled banks dominated banking sector, and the Bank of Greece set interest rate and administrative regulations. The banking system was used to finance the public sector deficit, and negative real interest rates prevailed. Despite considerable liberalization of the financial and banking sectors, state controlled banks still account for 45 percent of deposits and credits (down from 60 percent in 1995). Due to competition, however, and conscious policies to restructure the portfolios of several of these banks, their performance has improved, despite the fact that they have lost market share. Nevertheless, considerable effort is still needed to make them function like the private banks. Privatisations of public banks, mergers and entry of new banks have enhanced competition. The market share of publicly controlled banks has declined. A large number of specialized private firms offer a wide variety of financial services. The privatisation of banks has initiated a major restructuring of the financial sector and a repositioning of private groups. L (IIHFWV RI %DQN¶V SULYDWL]DWLRQ The volume of financial services has increased and prices (fees) have declined as the following table indicates x Profitability has risen considerably in recent years x Technical innovation such as increased automation has led to considerable service provision improvement, and the variety of products has expanded, banking employment has declined, but the entry of a variety of private companies offering financial services has enhanced overall sector employment. x Salaries for skilled personnel have increased rapidly. Year Fees and Commissions receivable as a % Spreads between lending and borrowing rates Of total assets 1994 1.53 11,3 1995 1,26 9,4 1996 1,23 9,1 17 1997 1,12 9,7 1998 0,97 9,6 1999 7,0 2000 6RXUFH %DQN RI *UHHFH x Considerable efficiency gains have been obtained in the financial service sector, labor productivity has increased and costs have declined. x The management of two state -controlled banks (namely the National Bank of Greece and the Commercial Bank of Greece) will no longer be voted by Parliament and would be chosen freely by their boards. ii) Revenues raised by Bank’s privatization Nine banks (Bank of Crete, Bank of Macedonia-Thrace, Bank of Central Greece, Ionian Bank, General Bank, National Bank, Commercial Bank, Agricultural Bank) have been sold to the private sector. The privatisation of the Ionian Bank was the largest ever privatisation in Greece. The Agricultural Bank of Greece ABG) is disposing financial and industrial subsidiaries in order to strengthen its capital base and concentrate in core activities. Furthermore, an international consultancy firm has been employed in order to speed up the restructuring of ABG’s operations. 18 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. 7DEOH 3ULYDWLVDWLRQ 5HYHQXHV IURP %DQNV 35,9$7,6$7,215(9(18(6LQ0686$ 7 0HWKRG &203$1< 727$/ 6ROG RI3ULYDWLVDWLRQ Ã%DQNÃRIÃ&HQWUDOÃ*UHHFHà 60,76 60,76 7UDGH LQ 6($ Ã%DQNÃRIÃÃ&UHWHà 76,65 76,65 ,QW &RPSWHQGHU Ã(7(à 1Ã%Ã* à 219,5 1.007,2 1226,71 6DOH VKDUH Ã(79$à 395,99 395,99 3 2IIHULQJ Ã&HQHUDOÃ%DQNà 48,78 48,78 7UDGH LQ 6($ Ã,21,$1Ã%$1.à 917,61 917,61 7UDGH 6DOHV Ã0DFHGRQLDÃ7KUDFHÃ%DQNà 95,12 95,12 6DOHV $JULFXOWXUDOÃ%DQNà 902,8 902,8 ,32 Ã&RPPHUFLDOÃ%DQNà 307,7 307,7 $OOLDQFH %DQN¶V727$/ *UHHN *UDQG 7RWDO The privatization of the state-controlled banks, except the above mentioned positive results to the economy and to their clients, raised revenues equal to USA$ 4032million or equal to 31.8% of Greek Grand Total proceedings from privatization for the period 1992-2000. Above table indicates the raised revenues by bank and year, as well the % sold and the method of privatization for each bank. 3XEOLF HQWHUSULVHVXWLOLWLHV The publicly owned enterprises, that number about 50, employ about 6 percent of wage labor, account for about 22 percent of all investments in Greece, their products account for 7 percent of the CPI basket, and their financing needs have imposed a heavy burden on overall public debt. In 1991 their contribution to GDP was almost 16,1% while their contribution 1999 was estimated to 6.1%. This indicates, in some way, the progress that has been made in privatisation. The ten largest enterprises among them are monopolies or oligopolies in telecommunications, energy, and transport. Inadequate management, inflexible labor agreements, high labor costs, and lags in 19 modernization have resulted in performance that has induced significant product market distortions, and has burdened the cost of operation of other sectors. Greek public enterprises had been poorly managed and had often been used to implement multiple policy objectives unrelated to their primary objective of efficiency providing quality goods and services Concerning public monopolies in utilities, the plan is to offer minority shares to the public through the stock market, while maintaining public control of management. L 5HVWUXFWXULQJ RI /RVV 0DNLQJ 3XEOLF &RUSRUDWLRQV The restructuring of loss-making public corporations (mainly in the transport, post-office and defense sectors) is well underway (law 2414/1996). It includes: • The appointment of high quality international management, • The appointment of high quality management consultants to design restructuring plans (feasibility study and initial valuation of asset, legal restructuring, financial restructuring), • The elimination of restrictive labor practices in order to increase productivity and competitiveness, • The transfer of surplus personnel to other areas of the public sector with excess personnel demand (local authorities, public hospitals etc.), and • The formation of strategic alliances with domestic or foreign firms. In most of the public sector companies belonging to the defense, transport and post-office sectors, business plans and management contracts have already been concluded, containing specific performance criteria. The Ministry of National Economy has recently drafted a newer law for public corporations amending the previous law 2414/96. According to the newer law public corporations listed in the stock exchange will enjoy considerable autonomy from the government. The corporate bodies (board of directors and shareholders general meeting) will take from now on the major strategic and operational decisions and will select and appoint the chief executive. 20 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. LL 6HFWRU WKDW KDYH EHHQ SULYDWL]HG 7HOHFRPPXQLFDWLRQV VHFWRU Before 1980, a public monopoly was held by OTE in all telecommunication service. In the telecommunications sector reforms that started in the early 1990s have led to a substantial improvements in services. Since 1992 OTE has faced stiff competition from the two private GSM mobile telephone operators (Panafon and Telestet) that has led considerable improvement of services and declines in prices. In January 2001 the Greek fixed telephony market opened to competition according to EU stipulations, and this is expected to further increase competition. The current tariff structure of OTE, with low fixed fees and charges for local calls, while high long distance charges, make it vulnerable to competition by new entrants. Three companies are operating in mobile telephony, Panafon, Telestet and COSMOTE (a subsidiary of OTE). The market for mobile services has grown very fast. Currently telecommunications comprises 4% of GDP. Prices have fallen considerably, especially in last three years, and are at or below OECD average. About other 240 companies provide a variety of services (leased lines, internet access, etc.) The Hellenic Telecommunication Organisation has currently almost 49% private share ownership and it has raised revenues equal to USA $ 4380 million or 35.1% of the total amount of money raising from Greek Privatisation. An important step towards the full privatization of OTE was taken through the launch of a EUR 1 billion (GRD 340 billion) bond convertible into shares (equivalent to 10% of the share capital bringing down the state’s share to 41%). An additional sale of a 5% stake is planned to a group of selected domestic and foreign banks. The banks will keep OTE’s shares for a specified time period with the objective of placing them with institutional investors as soon as the market condition permit. The company has already embarked on several joint ventures with private consortia developing new lines of activity. The Organisation has achieved a listing in the New York Stock Exchange, and the issue has been twice over subscribed. An Independent regulatory authority, the National Telecommunications and Post Commission (EETT) has been established to grant licenses and to oversee 21 the liberalized market. The EETT organized successfully a multiple round auction for 9 national fixed wireless access (Local Multipoint Distribution Services-LMDS) licenses. The licenses include four broadband (25 GHz) and three narrow-band (3.5 GHz) systems, which are based on wireless local loop technology. OTE was granted one extra license for each band, paying an amount equal to the maximum price derived from the auction. After 3 days and 13 rounds, 5 business groups submitted their final bids, reaching GRD15.7 billion. Adding the two licenses awarded to OTE total revenue for the government reached GRD 19.5 billion. The consortium includes one with the participation of the public power corporation (PPC_DEH). The inclusion of the latter was debated intensively on the grounds that it would hamper competition. Another important development in this sector was the sale of three 3G high speed (UMTS) mobile phone licenses to the three existing mobile operators, at a price of GRD 165 billion (EUR 484,5 million). Each of the three operators also gained an additional 3G-frequency slot at the minimum price of GRD 5 billion each. So the total UMTS spectrum cost reached GRD 55 billion per operator. An auction for two 2G licensees with a starting price of GRD 12 billion will also be completed soon. Overall revenues for the government from the sale of 3G and 2G licenses are expected to exceed GRD 180 billion, 70% of which are expected this year. Substantial improvements in the telecom sector have taken place in terms both of the number of services provided and their quality. In terms of quality progress has been together with the current value of each indicator 7DEOH: 4XDOLW\RIWHOHFRPPXQLFDWLRQVVHUYLFHV WDUJHWVDQGFXUUHQWYDOXH Indicator Target for 2003 Current value 1.Waiting time for new Connection to the Network Less than one week 5 days 2 Faults per 100 connections per year 10 17.4 3. Percentage of faults repaired within the next working day 95% 90% 4. Average operator response time < 10 sec 60 sec 22 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. Another important development for OTE is that the management will no longer be voted by Parliament and would be chosen freely by their boards. (QHUJ\ VHFWRU The energy sector consists of the electricity market in which still operates only one enterprise, the Public Power Corporation (PPC-DEH), and the oil and gas market where two public enterprises are operating, the Hellenic Petroleum Enterprise (ELPE) and the natural gas enterprise (DEPA), in which ELPE holds a stake of 35% and the rest belongs to the state. i). Electricity market The Public Power Corporation (PPC) is the main electricity enterprise in Greece. It was established in 1950 having as task the exclusive generation and transmission of electricity through Greece. PPC is vertically integrated in all aspects of the electricity sector except for system operation. Some industrial companies generate 2% of electricity, largely consumed by them with the rest sold to PPC. The electricity market is now entered a phase of deregulation, since February, 2001 (the market has to be fully deregulated by the year 2005). Under the EU’s directive 96/92/EC, concerning the regulation of the internal electricity market by the institution of common rules regarding the activities of the sector as a whole, and the law 2773/99 on the deregulation of the electricity market and regulation of energy policy matters, which was adopted to comply with the above mentioned directive, Greece must LQWHU DOLD open at least 34% of its electricity demand to competition. The same law (law 2773/99) removes the prohibition on entry into electricity generation. In mid-2000, a Regulatory Authority for Energy -RAE was established (by the same law an Independent System Operation-ISO has been set up) to regulate the sector, and to propose to the authorities the enactment of measures to protect competition and consumer’s interests. RAE delivers opinions on the granting or otherwise of licenses to firms to enter the electricity sector monitors the licensing procedures and the operations of the licenses. Regarding tariffs the Minister of Development asks RAEs opinion on the tariffs to be offered the licenses for supplying electricity to eligible customers. An additional objective of RAE is the establishment of a forward market for energy, which it would be supervised in order to smooth out fluctuations in energy prices. It must be noted that electricity prices (industrial prices are low while household prices are average compared with other European IEA countries) are at OECD averages, but these prices mask inefficiencies and distortions that reduce job creation and economic growth. It must be also noted that the above-mentioned law made some provisions on social security rights of PPC’s employees, and thus the privatization of PPC will be easier. 23 PPC (DEH), according to the previous law will unbundled its accounts for four electricity activities (lignite mining, generation, transmission, and distribution) and will consolidate accounts for the other non-electricity activities, shortly. The Ministry of Development has invited Greek and foreign companies to express their interest bidding for energy licenses. Until March 2001 RAE has received 996 applications from domestic and international companies which wish to generate electricity in Greece with proposals for a total installed capacity of 20.130 MW. Four of the 996 applicants were approved by RAE, with a capacity of 1.120 MW. At the first stage Greece intends to open 34% of the electricity market to private suppliers. The first round of bidding will refer to build and operate natural gas plants, hydroelectric plants and plants of renewable energy sources. However, the key constraint for new electricity generation companies is access to fuel, and not much competition is likely to emerge, as the barriers to entry are substantial, because of the vertically integrated nature of DEH. Moreover, the 1999 law foresees partial privatisation of PPC, but requires that the state retain at least 51% of the voting shares. According to the plan PPC is going to sale 20% of its shares through ASE by the end of 2001. ii) Oil and Gas Market 2LO PDUNHW Oil market consists of three refineries, but the Hellenic Petroleum Enterprise (ELPE), which is partly owned by the state, dominates the market. ELPE core business is the refining of crude oil, the marketing and trading of refined petroleum products, and the production and marketing of petrochemicals. It is also involved in the exploration, development and production of hydrocarbons, and the provision of specialized engineering services. Today only a small part of the oil market (the distribution of liquid products within Greece-the movement of these products between Greece and EU countries is not yet free- and the sale of products from the refineries to the various pump stations in different parts of the country) is deregulated and operates in a competitive manner. Competition is concerning product prices and involves directly the consumers, although product prices may very between the different parts of the country. 24 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. ELPE already is partly (31.1%+10% in 2001) privatized (42%), though ASE. The share of the state in ELPE is now only 57.9%(67,9% -10% in 2000) with the rest belonging to retail and institutional investors. 2.) Gas Corporation.(DEPA) The public Natural Gas Corporation (DEPA) is almost a state owned enterprise in which the state holds 65% of its share and the rest belongs to ELPE. Natural gas is currently imported mainly from Russia, through a pipeline and, and on smaller part, from Algeria in liquefied form (LNG). For this reason it has been given the right to Greece to derogate from the EU gas directive (98/30) on the liberalization of the gas market, up to November 2006. During the last few years significant progress has been made in the construction of gas supply network, which consists of: x The transmission network (high pressure trunk line and branches, metering and operation stations and maintenance centers), which is already in operation. x A liquid natural gas terminal (storage facility) in Revithousa and x A distribution network consisting of low and medium pressure networks. Some of the medium pressure pipelines are in operation while the low pressure are not yet operational Legislation passed in 1995 to comply with EU liberalization rules, provides for third party access to the natural gas network created by the Public Gas Corporation (DEPA) and for the licensing of pipeline companies to provide gas to areas of the country that DEPA grid does not service. However pipelines cannot be established until the national grid has been operational for seven years, nor can trading company licenses be issued until 10-years after the transportation system has begun to function. Under the terms of the governing legislation DEPA owns the network and operates the high-pressure distribution system. As far as the distribution of natural gas in the major urban areas is concerned companies whose shares will be in the private sector for at least at 49% level and the rest to the subsidiaries of DEPA and local authorities, will be operated. 25 We must point out that the Ministry of Development has decided to reduce its stake in this company below 50% from 65% today. An international tender is planned for the sale before the end of the year. :DWHU VHUYLFHV Athens Water and Sewage Company (EYDAP) were partially privatized in December 1999 by a listing of 30% of its shares on the Athens Stock Exchange. Prior to listing the company was restructured and broken up into two entities. The main assets of the company have been transferred to one entity. Through a leasing agreement EYDAP will secure the use of assets in exchange for covering maintenance costs. The other entity includes the networks, which remains in the possession of EYDAP. The rate of tariff increases for the period 2000-2004 has been set; water tariffs increase in line with inflation while sewage tariffs have been aligned with the cost of providing services. Regarding the Sallonica water and sewage company partial privatization was taken placed in the autumn of 2001. 2WKHU HQWLWLHVRUJDQL]DWLRQV WKDW KDYH EHHQ SULYDWL]HG L +HOOHQLF 9HKLFOH ,QGXVWU\ (/92 ELVO manufactures jeeps, buses and armored personnel carriers for the Greek Army. Last year, a domestic consortium consisting of the metals-trading group Mytillineos bid to acquire 43% of the company. LL 7KH 6WRFN ([FKDQJH $6( The Athens Stock Exchange was established in 1876. Under the provision of Law 2324/95 the company was transformed into a joint-stock company operating under the name “Athens Stock Exchange SA” with the Greek state as the sole shareholder. In December 1997, it was decided that institutional investors, brokers and issuers of listed shares could participate to the company’s share capital via a private placement. The Greek state offered 39.7% of ASE’s share capital, raising GRD 22.8 billion. In November 1998, the second private placement took place- to the same categories of investor-with the offering of 26 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. another 12% of the company’s share capital. The proceeds from the second tranche amounted to GRD 10.2 billion. After that the Greek state has an equity stake of 48.3% in ASE share capital, while the rest is owned by companies listed on the ASE, brokerage firms and institutional investors, such as banks, pension funds, mutual funds and insurance companies. The Greek state, as majority holder, has agreed to the listing of the company’s shares on ASE in the coming years. LLL 'XW\ )UHH 6KRSV ')6 Duty free shops were established in 1979 and were operated 33 outlets at airports, ports and border crossings throughout Greece. Following the abolition of duty free sales within EU, the company proposes to offset the inevitable reduction in the sales by expanding its activities in non-duty –free retail sales. Today 67% of the shares of DFS have been transferred to Agricultural Bank of Greece. LY &26027( A 15% stake in OTE’s mobile subsidiary was floated on the Athens Stock Exchange raising GRD 156 million 5HVXOWV RI SULYDWLVDWLRQ a) Revenues raised: Table 2 below indicates that the total money raised from privatization during the period 1992- 2000 has reached the level of GRD 3.6 trillion (USA $ 12 663,14 million) or 9,1% of 2000 GDP. These revenue were used mainly to retire government debt, or to funding adjustment policies for employees, where was necessary. The following Figure 1 presents the revenue of privatization by method of privatization while the next one (Figure 2) the privatization revenues by economic sectors. 27 Figure 1 PRIVATISATION REVENUE BY METHOD OF PRIVATISATION 69% 29% 2%0% IPO+ASE SALES Strategic Alliance Figure 2 Privatisation Revenues by Sectors 19% 2% 2% 33% 7% 37% AILING Banks Telecoms Energy Waters Other 28 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. Next table 2, as well as the following diagram 3, also illustrates that there was a sharp increase of privatization revenues during the period 1997-1999. In 2000 the speed growth rate of privatization was low because the market conditions were deteriorated. Table 2 35,9$7,6$7,21 5(9(18(6 LQ0686$ 727$/ 727$/ $,/,1* 34,9 73,5 44,4 28,2 15,2 196,2 727$/ 3(17(35,6(6 529 1380,3 3969,2 4896,4 1692 12466,9 *5((. *5$1' 727$/ 0 34,9 73,5 44,4 557,2 1395,5 3969,2 4896,4 1692 12663,1 $YHUDJH 6 86$ *5' 190,7 229,3 242,6 231,7 240,7 273,1 295,5 305,7 349,8 *UDQG 7RWDO *'3 1 727$/ (8 4886 30590 27469 35460 46599 67535 60167 61649 46756 381111 727$/ 2(&' 17396 40294 50884 56684 68250 96175 94011 104780 65063 593537 27+(5 &28175,(6 16098 17920 17974 13546 21493 57099 45153 37107 35000 261390 */2%$/ 727$/ 33494 58214 68858 70230 89743 153274 139164 141887100063 854927 6RXUFH Ã5HFHQWÃ3ULYDWLVDWLRQÃ7UHQGVÃ2(&'Ã3ULYDWLVDWLRQÃÃ'DWDEDVHÃà à 29 )LJXUH *UHHN3ULY5HYHQXHV 5000 4500 4000 3500 0 3000 Ç 8 2500 6 $ 2000 1500 1000 500 0 GREEK GRAND TOTAL(1+2) 1992 1993 1994 2.TOTAL P.ENTER. 1995 1996 1997 1.TOTAL AILING 1998 UPU6GÃ6DGDIB !UPU6GÃQ@IU@S BS@@FÃBS6I9ÃUPU6G ! E 3ULFH UHGXFWLRQ DQG JURZWK LQFUHDVHV Structural and regulatory reforms that have been implemented over the past decade have made an important contribution to the main macroeconomic magnitudes. In the 1998 OECD economic Survey of Greece you can find some estimation of the potential long –run gains from the broad structural changes in Greece. It found that the potential cumulative (direct and indirect) national income gains from restructuring the main public enterprises and introducing competition in the markets, where they operate, could be of the order of 5-7 percent of GDP. The total effect could be possibly as high as 10 per cent of GDP, if the impacts of higher quality products and improvements in the budget balance were taken into account. On the other hand a more efficient public enterprise performance could have a downward impact on the aggregate price level-one percentage point off the CPI price level. 30 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. F (PSOR\PHQW DQG VDODULHV UHVXOWV In some sectors there was a reduction in the employment during the period of restructuring. However the entry of a variety of private companies to different sectors (telecoms, electricity, financial services) enhanced overall employment. We must point out that Greek government in some cases of privatization have been addressed labor issues to privatization candidates, for the purpose to keep the employment stable for some time. On the other hand because the competition was increased in the innovation enterprises, salaries for skilled personnel have increase rapidly. The privatisation of the above mentioned public sector companies and banks would enhance the efficiency of the corporate sector. It also entails a lower burden for the state budget and, consequently, for the taxpayer. 31 STATISTICAL ANNEX 7DEOH 35,9$7,6$7,21 5(9(18(6 LQ0686$ 727$/ 727$/ $,/,1* 34,9 73,5 44,4 28,2 15,2 196,2 727$/ 3(17(35,6(6 529 1380,3 3969,2 4896,4 1692 12466,9 *5((. *5$1' 727$/ 0 34,9 73,5 44,4 557,2 1395,5 3969,2 4896,4 1692 12663,1 $YHUDJH 6 86$ *5' 190,7 229,3 242,6 231,7 240,7 273,1 295,5 305,7 349,8 *UDQG 7RWDO *'3 1 727$/ (8 4886 30590 27469 35460 46599 67535 60167 61649 46756 381111 727$/ 2(&' 17396 40294 50884 56684 68250 96175 94011 104780 65063 593537 27+(5 &28175,(6 16098 17920 17974 13546 21493 57099 45153 37107 35000 261390 */2%$/ 727$/ 33494 58214 68858 70230 89743 153274 139164 141887100063 854927 32 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. 7DEOHÃà $,/,1*Ã(17(535,6(6à 35,9$7,6$7,21Ã5(9(18(6ÃLQÃ0Ç86$à 727$ / &203$1<à à à à à à à à à à Ã$/HNNDVÉ$ILà 1,87 1,87 $ULVWRQà 1,2 1,2 Ã$VWLÃ0LONà 2,13 2,13 Ã$YHHHWKÃ6$à 0,3 0,3 Ã%RORVÃ&DEOHVÃ6$Ãà 2,5 2,5 Ã'DPLJRVà 5,05 5,05 Ã'RGRQLÃ6$à 6,87 6,87 'RXULGDVà 0,95 0,95 Ã(OYLNÃ6$à 6,24 6,24 Ã0DNÃ/H\NROLWKRLà 6,14 6,14 Ã(SDVà 5,87 5,87 Ã(VSHULVÃ6$à 2,7 2,7 Ã(WHOà 0,01 0,01 Ã(YRWH[à 0,02 0,02 Ã)L[à 9,28 9,28 Ã*DYULOà 0,7 0,7 Ã*HQLNLÃ6$à 1,6 1,6 Ã0L[Ã3LHULDVÃ6$à 1,82 1,82 Ã*UHHNÃ0DUEOHVÃà 0,28 0,28 Ã*UHHNÃ7H[WLOHVà 6,49 6,49 Ã,OLRILQÃ6$Ãà 5,44 5,44 Ã,OYLJDOÃ6$à 0,45 0,45 Ã,SLURVÃ6$Ãà 0,17 0,17 Ã.DVVDGUDÃ0LQHVà 45,3 45,3 Ã/LQWQHUà 1,89 1,89 Ã0DYHÃ6$Ãà 4 4 Ã1DIVLÃ6$à 1,51 1,51 2X]RÃ.DWVDURVÃà 0,07 0,07 Ã3DNRÃ+HOODVÃ6$à 0,02 0,02 Ã3LU3DWUÃ7H[WLOHVà 13,1 13,1 Ã3RUVHOà 0,54 0,54 3URYLJDOÃ6$à 6,49 6,49 Ã6HUJDOÃ6$à 0,71 0,71 Ã6LQHUJDOÃ6$Ãà 5,13 5,13 Ã7HPHDÃ6$Ãà 0,31 0,31 Ã9HSROÃ6$Ãà 0,64 0,64 Ã9LH[Ã6$Ãà 3,95 3,95 Ã9LRYDOYà 0,65 0,65 Ã*UHHNÃ6KLS\DUGVÃ6$Ãà 34,67 34,67 &KDONLVÃ&HPHQWà 0 Ã1HRULRQÃ6LURXà 9,14 9,14 727$/ÃÃÃ$LOLQJà Ãà à Ãà Ãà Ãà 33 7DEOH 38%/,& (17(535,6(6 35,9$7,6$7,215(9(18(6LQ0686$ 7 727$ / 6ROG 0HWKRGà &203$1< à à à à à à à à à ÃRIÃ3ULYDWLVHà 3ULYDWH Ã$6([FKDQJHà 111,49 111,49 SODFHPH Ã%DQNÃRIÃ&HQWUDOÃ*UHHFHà 60,76 60,76 7UDGH LQ 6($ Ã%DQNÃRIÃÃ&UHWHà 76,65 76,65 ,QW &RPSWHQ Ã'XW\Ã)UHHÃ6KRSVÃà 369,30 689,54 1058,84 ,32 (PSOR\ Ã(OHIVLVÃ6KLS\DUGVÃ6$à 109,65 109,65 VEX\RX Ã(7(à 1Ã%Ã* à 219,5 1.007,21 1226,71 6DOH VKDUH Ã(79$à 395,99 395,99 3XEOLF 2IIHULQ Ã(<'$3à 230,23 230,23 ,32 Ã&HQHUDOÃ%DQNà 48,78 48,78 7UDGH LQ 6($ Ã+HOOHQLFÃ3HWUROHXPà 303,12 537,65 840,77 7UDGH LQ $6( Ã+HOOÃ7HOÃ2UJ 27( à 529,36 1.270,64 1.491,21 1.088,59 4379,8 ,32 Ã,21,$1Ã%$1.à 917,61 917,61 7UDGH 6DOHV Ã0DFHGRQLDÃ7KUDFHÃ%DQNà 95,12 95,12 ,32 Ã2O\PSLFÃ&DWHULQJà 8,7 29,59 38,29 3ULPB6HF2I Ã3ULYDWLVDWLRQÃ&HUWLILFDWHVà 1.184,60 1184,6 $JULFXOWXUDOÃ%DQNà 902,8 902,8 ,32 Ã&26027(à 467,78 467,78 ,32 Ã&RPPHUFLDOÃ%DQNà 307,7 307,7 $OOLDQFH +HOOÃ9HKLFOHVÃà 13,6 13,6 6WUDWHJLF 727$/Ã3(Và 34 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. Table 4. 3ULYDWL]DWLRQ5HYHQXHVE\PHWKRGRISULYDWL]DWLRQ 0686$ ,32$6( 6$/(6 6WUDWHJLF $OOLDQFH Ã$6([FKDQJHà 111,49 Ã%DQNÃRIÃ&HQWUDOÃ*UHHFHà 60,76 Ã%DQNÃRIÃÃ&UHWHà 76,65 Ã'XW\Ã)UHHÃ6KRSVÃà 1058,84 Ã(OHIVLVÃ6KLS\DUGVÃ6$à 109,65 Ã(7(à 1Ã%Ã* à 1226,71 Ã(79$à 395,99 Ã(<'$3à 230,23 Ã&HQHUDOÃ%DQNà 48,78 Ã+HOOHQLFÃ3HWUROHXPà 840,77 Ã+HOOÃ7HOÃ2UJ 27( à 4379,8 Ã,21,$1Ã%$1.à 917,61 Ã0DFHGRQLDÃ7KUDFHÃ%DQNà 95,12 Ã2O\PSLFÃ&DWHULQJà 38,29 Ã3ULYDWLVDWLRQÃ&HUWLILFDWHVà 1184,6 $JULFXOWXUDOÃ%DQNà 902,8 Ã&26027(à 467,78 Ã&RPPHUFLDOÃ%DQNà 307,7 +HOOÃ9HKLFOHVÃà 13,6 Ã$LOLQJÃ(QWHUSULVHVà 196,2 Ãà 35,9$7,6$7,21ÃÃ5(9(18(Ãà 8,729.89 3612,18 13,6 307,7 *The main privatization methods are: Initial Public Offering (IPO) in the capital markets, trade sales to strategic investors, management/employee buy-outs, and asset sales, often following the liquidation of the SOE 35 Figure 1. PRIVATISATION REVENUE by Method of Privatisation 69% IPO+ASE SALES Strategic Alliance 29% 2%0% 36 The views expressed in this paper are those of the author and do not necessarily reflect those of the OECD. Table 5 PRIVATISATION REVENUES BY SECTOR M$USA $,/,1* %DQNV 7HOHFRPV (QHUJ\ :DWHUV 2WKHU Ã$6([FKDQJHà 111,49 Ã%DQNÃRIÃ&HQWUDOÃ*UHHFHà 60,76 Ã%DQNÃRIÃÃ&UHWHà 76,65 Ã'XW\Ã)UHHÃ6KRSVÃà 1058,8 Ã(OHIVLVÃ6KLS\DUGVÃ6$à 109,65 Ã(7(à 1Ã%Ã* à 1226,71 Ã(79$à 395,99 Ã(<'$3à 230,23 Ã&HQHUDOÃ%DQNà 48,78 Ã+HOOHQLFÃ3HWUROHXPà 840,77 Ã+HOOÃ7HOÃ2UJ 27( à 4379,8 Ã,21,$1Ã%$1.à 917,61 Ã0DFHGRQLDÃ7KUDFHÃ%DQNà 95,12 Ã2O\PSLFÃ&DWHULQJà 38,29 Ã3ULYDWLVDWLRQÃ&HUWLILFDWHVà 1184,6 $JULFXOWXUDOÃ%DQNà 902,8 Ã&26027(à 467,78 Ã&RPPHUFLDOÃ%DQNà 307,7 +HOOÃ9HKLFOHVÃà 13,6 23.Ailing 196,2 3ULYDWLVDWLRQ5HYHQXHV Figure 2 37