The government sees the private sector as the engine of growth

ORE than 1.6 billion euros ($2.1 billion)—1% of GDP—is to be raised in 2005 through a new privatization program. The Postal Savings Bank will be floated on the Athens Stock Exchange and a new attempt will be made to sell off Greece’s national carrier, Olympic Airlines in coordination with the European Commission. The government also plans to increase the participation of the private sector in main infrastructure projects.

The public sector of the economy accounts for half Greece’s GDP. In addition to improving state revenues, curbing the budget deficit, and financing tax cuts, the privatization of state enterprises is in line with its broader policy of making Greece more competitive and reducing bureaucratic inefficiencies.

Minister of Economy and Finance George Alogoskoufis says, “The role of the State in the economy must gradually be reduced and the presence of the private sector across a wider area has to be felt more strongly.”

The European Union's executive commission has urged Athens to introduce cost-cutting measures following the recent revision of the previous government’s budget figures.

Prime Minister Costas Karamanlis says the new administration is seeking to contain public sector spending, rationalize a public investments program, and make more efficient use of the state's real estate assets, including the Olympic facilities, in cooperation with the private sector. “The new generation of privatizations will accelerate growth and improve state revenues,” he says.

Care will be taken to ensure that the program is carried as efficiently and profitably as possible. “We are selecting timing, procedures, and methods to maximize benefits and avoid any unwanted side-effects,” says Mr. Karamanlis.

“We are highlighting the value of each company before its privatization and adopting a variety of methods, such as strategic alliances, flotations, assignment contracts, and full privatization.”