A SUPPLEMENT TO EUROMONEY/JUNE 1996Time for tough decisionsThe long-term outlook for Greece's economy is promising. But investors say the government needs to drastically rethink ways to increase productivity, develop the bond and stock markets, and boost privatization. By Katharine MortonEven though Athens is a frustrating place to be at the moment much has been achieved in the past three years: the government has brought inflation down to single digits for the first time in over 20 years, checked the public deficit, opened new trading areas in the Balkans and deregulated the capital markets.In the short term, though, things look bad. Investors are concerned that a different mentality is needed for Greece to achieve convergence. "By the end of 1996 we will have covered two-thirds of the distance toward fulfilling the Maastricht criteria," says Stefanos Avgouleas, special adviser at the national economy ministry. "But we are reaching the hard core of inflation and the budget deficit." When inflation reached 9.2% in the year to April it became clear that Greece would not meet its own 5% convergence goal this year - anything under 7.5% will be a bonus. |