Transcript See presentation
Slide 1
Greece 2020: Unlocking The Potential Of The Greek Economy
Alpha Bank Lecture
SEESOX
Michael Masourakis
St. Antony’s College
Oxford
Chief Economist
Monday 9 May, 2011
Alpha Bank
Slide 2
Ageing And Unsustainability: Crime And Punishment!
A
pre-crisis
long-run
fiscal scenario 2010-2060
FDI
& Exports
(2007)
Retirement
and Health
Expenditure (as % of GDP)
FDI
&
(2007)
FDI
& Exports
Exports
(2007)
as % of GDP
10%
0%
as % of GDP
Primary
Deficit
Greece
24.1%
Reduction of
expenditure due to the
overhaul of the social
security system
800%
Debt
700%
Interest
Payments
11.7%
Without
measures
600%
14.2%
6.4%
5.0%
-10%
500%
Deficit
-20%
400%
2007
-30%
2060
ΕU-12
300%
11.5%
9.2%
200%
Retirement
Health
6.0%
4.7%
-40%
100%
-50%
0%
2020
2040
2007
2060
Source: IMF, August 2009
2060
Source: European Commission, The 2009 Ageing Report
Deficit, Debt
Ageing Population
as % of GDP
60
Old age dependency ratio
(65+ / (15-64))
57.1
50
154%
143%
51.1
159%
159%
156%
127%
111%
5.6%
40
3.2%
0.9%
30
28.0
24.3
24.3
27.0
21.1
21.1
-4.9%
0
-4.7%
-10.1%
20
10
Time -1.1%
Deposits
> 80
7.5
7.5
6.8
> 80
> 80
> 80
2010
2060
Greece
Source: European Commission, The 2009 Ageing Report
EU-15
-9.8%
-2.6%
63%
-7.6%
-6.5%
2011
2012
-4.8%
-10.5%
2008
-15.4%
2009
2009
2009
2010
2010
Debt
Source: European Commission, Feb.2011
2011
Deificit
2013
2012
2013
2014
2014
Primary Deficit
1
Slide 3
Budgetary Derailment: Spending Other Peoples’ Money!
Primary
Deficit (General
FDI
& Exports
(2007)Government)
Wages
Benefits
/ Taxes and Soc. Sec. Contributions
FDI &and
Exports
(2007)
in € bn
105.5%
96.9%
92.3%
State Budget
Revenues
85.1%
59.5
56.7
50.5
54.3
State Budget Primary-10.8
Current Spending -50.4
State Budget
Investment Spending -9.6
-9.6
Other
-24.0
-58.0
-10.8
-51.7
-52.6
-9.6
-8.4
-10.3
-8.5
-3.8
75.0%
70.1%
77.2%
85.3%
96.9%
85.3%
83.7%
-0.9
-14.5
General Government Primary Deficit
2009
2008
2000
2010
Investment
Driven
Growth
(%∆ (%∆
YoY)YoY)
Tax&Revenue
(2008)
Investment
Driven
Growth
FDI
Exports
(2007)
FDI
&
Exports
(2007)
Goods And
Services
Social Security
Contributions
9.0
3.5
1.8
11.4
3.7
1.9
2.9
3.4
2.8
2.3
10.6
8.3
13.5
12.1
Italy
Spain
9.0
OECD
7.1
10.6
10.8
Greece
2011
Investment Driven Growth (%∆ YoY)
7.5
11.6
12.2
2010
Greece
Public Sector Employees by Economic Sector (2010)
% of GDP
4.7
2.5
1.5
2009
Euro Area
Source: Government Finance Statistics, Eurostat, European Commission, Feb.2011
Source: Budget 2011, Ministry of Finance
Personal
Income
Corporate
Income
Property
2008
2011B
16.1
France
Public Adm. 374.4 th.
Water
8.4 th.
7.2 th.
Libraries, Museums,
Waste Removal
19.4 th.
Electricity
23.1 th.
Education 243.4 th.
Planning Activities
13.5 th.
Postal Services
15.3 th.
Social Welfare
16.5 th.
R&D
5.1 th.
Health 130.4 th.
Telecoms
14.6 th.
Home Care
6.1 th.
Banks
31.9 th.
Radio & TV
4.7 th.
5.2 th.
Sports
Storage
20%
8.3 th.
Transportation 16.9 th. 16%
100%
91%
89%
85%
84%
73%
73%
70%
69%
66%
62%
51%
42%
39%
36%
32%
22 out of 100
employees
in the public sector
Out of the total number of employees of each sector
Source: Revenue Statistics, OECD
Source: Hellenic Statistical Authority
2
Slide 4
Fiscal Consolidation: Seven Lean Years!
Primary Deficit
56
The Fiscal Consolidation Effort, 2011-2015
in € bn
2.9
1.2
2.8
1
0
-2.6
-0.5
-4
-4.6
-9
-8.6
-11.5
-14
-11.6
-12.3
-13.4
Primary Deficit (General Gov.)
-14.4
Primary Deficit (Central Gov.)
Interest Payment
Investment Budget Deficit
Other
2011B
2010
-24.0
2008
-4.6
-10.8
-9.5
-19
-24
-24
-3.6
-5.4
-5.4
-7.5
2009
Source: Budget 2011, Ministry of Finance
49.2%
Other
Interest
Intermediate
Consumption
6.9
5.0
6.4
5.3
7.1
6.1
Compensation 12.1
Of Employees
Social
19.1
Transfers
2007
53.2%
2008
2008
13.5
20.9
2009
2009
9.
10.
11.
12.
13.
Streamlining the Public Wage Bill
Reduction in Operational Expenses
Closure/Merger of Public Entities
Restructuring of State-owned Enterprises
Reduction in Defence Spending
Streamlining Health Expenditures
Streamlining of Pharmaceutical Expenditures
Reduction in Social Security Fund expenditures
and streamlining of other social spending
Strengthening of Tax Compliance
Reduction in Tax Exemptions
Increases in Social Security Fund revenues and
tackling social insurance contribution evasion
Increase in Local government revenues
Other expenditures
Total
% of GDP
0.9%
1.1%
0.5%
1.0%
0.5%
0.5%
0.7%
1.1%
1.5%
0.9%
1.5%
0.3%
0.9%
11.4%
Source: Hellenic Republic, Ministry of Finance, The Medium-Term Fiscal Strategy, 2012-15, 15 April 2011,
http://www.minfin.gr/portal/en/resource/contentObject/id/44f0e4b9-5589-4778-bac0-296bf8ad4856
Driven
Growth
(%∆ (%∆
YoY)YoY)
Investment
Driven
Growth
Revenue
FDI
&Investment
Exports
(2007)
FDI
&
Exports
(2007)
Expenditures
as % of GDP
1.
2.
3.
4.
5.
6.
7.
8.
50.2%
50.3%
5.3
5.1
6.5
6.6
5.3
4.6
12.5
12.5
20.6
2010
2010
21.5
2011
2011
Source: The economic Adjustment Programme for Greece, Third Review, Government Finance Statistics
as % of GDP
39.7%
37.8%
40.6%
6.6
42.7%
7.7
Other
6.2
5.4
Direct Taxes
7.9
8.2
7.9
8.5
Indirect Taxes
12.1
11.1
13.1
13.8
Social Security
13.5
Contribution
13.1
13.0
12.7
2009
2009
2010
2010
2011
2011
2007
2008
2008
Source: The economic Adjustment Programme for Greece, Third Review, Government Finance Statistics
3
Slide 5
Debt Dynamics: Skating On Thin Ice!
Μακροχρόνιες
Προοπτικές
2010-2060
Χωρίς
General
Government
Financing
Requirements
Investment
Driven
Growth
(%∆ (%∆
YoY)
Εισροές
Ξένων(2007)
Άμεσων
Επενδύσεων
Investment
Driven
Growth
YoY)
ΔΝΤ:
Έλλειμμα,
Χρέος
και
Ονομαστικό
ΑΕΠ
FDI
&
Exports
FDI
&
Exports
(2007)
FDI
Exports
Μεταρρυθμίσεις
and
Sources
(without(2007)
€ 110 bn maturity extension)
Refinancing Needs
€ bn
80
With € 110 bn
3 ½ years maturity
Troika
60
Amortization
Market
Access
40
Interest
24.3
21.1
20
Primary
Deficit
Other
Other
0
7.5
With € 110 bn
7 ½ years maturity
2014
2013
2011
20
13
2012
20
09
2009
20
2010
11
2014
20
09
2009
22010
01
1
2011
20
2012
13
2013
-20
Source: IMF, March 2011
Source: The economic Adjustment Programme for Greece, Third Review
Public Debt Sustainability Scenarios
Privatization
Strengthens Debt
Sustainability
Public
Debt Sustainability
Analysis
as % of GDP
as % of GDP
1 p.p lower primary
deficit
170
170
No privatizations
150
150
€ 11,8 δις
Baseline
Scenario
130
110
130
110
1 p.p. higher
growth
90
Privatizations
€ 50 bn in 2011-2015
90
70
70
2006
2008
2010
2012
2014
2016
2018
2020
2006
2008
2010
2012
2014
2016
2018
2020
* Nominal growth rate: 3,5% * Primary surplus: 5,5%
Source: The economic Adjustment Programme for Greece, IMF
Source: IMF, March 2011
4
Slide 6
Banking: Good Banks, Wrong Place, Wrong Time!
Public
Private
Debt
FDI
& and
Exports
(2007)
Private sector loans and deposits
as % of GDP
Loans / Deposits - 125%
Loans / GDP - 112%
300
Households
250
Businesses
State
%
25
200
20
150
15
Finland
Germany
France
Austria
Italy
Belgium
0
Greece
0
Spain
5
Netherlands
50
Ireland
10
Portugal
100
Loans to the private sector (yoy Δ%)
-5
Private sector deposits (yoy Δ%)
-10
-15
Jan-04
Source: Thomson Datastream, Credit Suisse, Capital Economics, Alpha Bank Research
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Source: Bank of Greece
Capital adequacy
ECB Funding
€ bn
160
Core Tier 1 capital ratio
Portugal
140
12.0%
Ireland
120
9.6%
242%
10.2%
237%
Greece
100
Spain
183%
9.2%
80
102%
16,4x
60
19,0x
24,7x
18,1x
40
20
Alpha Bank
0
2005
2006
2007
Source: National Central Banks, ECB, IIF calculations
2008
2009
Peer 1
Peer 2
Total Assets / Tangible Equity GGBs/Core Tier I
Peer 3
2010
Source: Financial reports and presentations of banks
5
Slide 7
Structural Rigidities: Atlas Overwhelmed!
Doing Business Rankings
Competitiveness Index Scores
GR
109
UK
4
Starting a business
149
17
Protecting investors
154
10
Getting credit
89
2
Dealing with construction permits
51
16
153
22
Paying taxes
74
16
Trading across borders
84
15
Enforcing contracts
88
23
Closing a business
49
7
Ease of doing business
Registering property
Best score: 7
Basic requirements
Institutions
Infrastructure
Macroeconomic environment
Health and primary education
Efficiency enhancers
Higer education and training
Goods market efficiency
Labor market efficiency
Financial marekt development
Technological readiness
Market size
Innovation and sophisticaltion factors
Business sophistication
Innovation
Governance
Corruption
2009-2010
6,6
6,0
5,8
5,7
5,3
5,2
4,7
4,0
3,8
1 = very common
7 = never occurs
3,2
3,1
2,9
2,3
2,0
UK
5.58
5.28
5.88
4.76
6.40
5.28
5.34
4.96
5.29
4.73
5.58
5.80
4.98
5.32
4.65
Source: The Global Competitiveness Report 2010-2011, World Economic Forum
Source: Doing Business 2011, World Bank, International Finance Corporation
New Zealand 1
Hong Kong 8
UK 11
Germany 14
Ireland 21
Japan 27
USA 34
Spain 50
China 55
India 71
Italy 77
Greece 94
Brazil 121
GR
4.49
3.67
4.57
3.61
6.13
4.12
4.67
3.91
3.71
3.88
4.06
4.52
3.41
3.83
3.00
2,5
3,0
3,5
4,0
4,5
5,0
5,5
6,0
Source: The Global Competitiveness Report 2010-2011, World Economic Forum.
6,5
7,0
1. Finland
3. New Zealand
5. Denmark
14. United Kingdom
36. Portugal
72. Greece
Greece
72.
80. Italy
90. Turkey
95. India
99. Bulgaria
117. China
123. Serbia
137. Albania
163. Russia
172. Pakistan
213. Somalia -2.53
-3
1.94
1.91
1.87
1.71
1.04
0.64
0.39
0.12
0.05
-0.05
-0.41
-0.35
-0.52
-0.77
-0.93
-2
Source: Governanance Indicators, World Bank
-1
0
1
2
3
6
Slide 8
Structural Reform: Greece In The Reformatory!
LabourSupply
marketof New Homes Slows
Future
Minimum wage down by 16%
Extension of probation period for new jobs to 1 yr.
Arbitration system: symmetric access & independence
Firm-level agreements over sectoral/occupational
Elimination of the possibility of the MoL to extend sectoral
__& occupational collective agreements
Reduction in over-time payment for part-time jobs
Increase in temporal limits in use of temporary working
__agencies
Tackle undeclared work
Source: Economic Reviews, European Commission
Liberalization
Future
Supply of professions
New Homes Slows
Impacts 160 services sectors
Investment Driven Growth (%∆ YoY)
Driven
Growth
(%∆ (%∆
YoY)YoY)
Investment
Driven
Growth
Pension
reform(2007)
FDI
Exports
FDI&Investment
&
Exports
(2007)
Containment of the long-run increase in pension costs
__from 12.5 to under 2.5 pps of GDP
Retirement age for males and females at 65 yrs by 2015 –
__increasing in line with life expectancy after 2020
Pensions freeze for 2010-2013
Pension funds will be merged in three by 2018
Updated long term projections for pension expenditure by
__March 2011
Reform of the functioning of supplementary pension funds
Source: Economic Reviews, European Commission
State Owned Enterprises – Local Authorities
SOEs will be audited on a quarterly basis
General prohibition of unjustified restrictions
The MoF’s special secretariat for SOEs is charged with the
__overview of the restructuring
Special legislative action for the liberalisation of the
__profession of notaries, lawyers, architects, mechanics and
__actuaries
The MoF will revise Law 3429/05 on SOEs to ensure sound
__corporate governance
Legislative action by the MoH for the liberalisation of the
__profession of pharmacists
Expected positive effects amounting to gains in GDP of
__over 10% in the long run and a downward effect on prices
__of around 7.2%.
Source: Economic Reviews, European Commission
Horizontal wage cut by 10% (+ wage ceiling)
Ceiling for extra payments at 10% of wage expenditure
Number of municipalities reduced to 325 from 1,034;
__54 prefectures dissolved (their powers transferred to the
__existing 13 peripheries)
Source: Economic Reviews, European Commission
7
Slide 9
Key Privatization Initiatives: Ambitious Greece!
Development of real estate assets
Registration and evaluation in a Single Land Registry.
Surface rights and long-term leaseholds legally established.
Conditions for holiday and tourist accommodation and property
__development defined.
Zoning and building conditions for large properties expedited
__(fast track procedures).
Individual specialized portfolios of large properties to be established in
__a National Sovereign Fund of Public Land.
Airports – Ports – Roads
Extension of the duration of the concession agreement for Athens
__International Airport ( AIA) and gradual sale of government stake.
Corporatization of all (29) regional airports to attract private capital /
__know-how to upgrade operations (similar structure to AIA_concession).
Public Private Partnership structures to develop the Attica Port
__System (Peiraieus-Rafinia-Lavrio) and 12 other regional ports to
__upgrade facilities.
Private investment structures to equip marinas with modern tourist
__infrastructure.
Portfolios to be structured as Special Purpose Vehicles for sale in
__global markets.
Operation, maintenance and toll rights for existing motorways to be
__assigned to private investors on a concession basis (Egnatia Odos
__Motorway by end-2011).
Four portfolios to be delivered (one every six months from June 2011)
A special Purpose Vehicle with the rights to future toll revenues from
__motorways will be set up and sold to private investors.
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
Telecommunications – Broadband
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
Energy – Gaming
Creation of a modern and wide fiber optic cable network
Reduction of state’s equity holding in Public Power Corporation
__(DEH) and in Public Gas Company (DEPA) to 34% in 2011-2012).
Development of a modern telecoms broadband and digital
__infrastructure utilizing the frequency spectrum and digital dividend
__(starting in 2012).
Development of undersea gas storage facilities through foreign
__investment in 2011-2012.
Extension of mobile telecommunications licenses (in 2011).
Selection of a strategic investor in Hellenic Post to take operational
__control of nationwide services (starting in 2012).
Reduction of state’s participation in the Hellenic
__Telecommunication Organization.
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
Sale of nickel mining company (LARCO) in 2011.
Regulation of the gaming market (including e-gaming) in 2011.
Extension of the concession agreement for gaming/football
__prognostics and issue of new licenses for e-gaming to OPAP.
Full privatization of OPAP (2012), Parnitha Casino (2011), State
__lotteries (2011), Horse Racing (2012).
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
8
Slide 10
Privatisation: The Triumph of Hope Over Experience?
Trade Sales to Strategic Investors
Sale of Concessions SPV
% owned
2011
Hellenic Defense Systems
Railroads (TRAINOSE)
Nickel mining (LARCO)
Hellenic Horse Racing Corporation
Casino of Parnitha (Mont Parnes)
2012
Hellenic Post (ELTA)
Athens Water and Sewerage (EYDAP)
Thessaloniki Water and Sewerage (EYATH)
Hellenic Vehicle Industry (ELBO)
Hellenic Football Prognostics Organization (OPAP)
2013
Agricultural Bank of Greece
Hellenic Postbank
Value
100%
100%
55%
100%
49%
90%
61%
74%
51%
34%
€ 1,659 mn
76%
34%
€ 385 mn
€ 314 mn
€ 370 mn
€ 139 mn
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
Estimated Revenue: € 12-17 bn in 2011-2013
Other Initiatives
% owned
Value
Potential up to 2015
Sale of Shares
Public Gas Corporation (DEPA) - 2011
65%
Hellenic Telecomms (OTE) - 2011
16%
€ 621 mn
Public Power Corporation (DEH) - 2012
51%
€ 1,388 mn
Partial Privatization and Introduction of
Stragegic Investors
State Lottery Tickets - 2011
- € 10 - 15 bn from enterprises and infrastructure
- € 25 - 35 bn from strategic management of rights and
real estate asset development
Timing
100%
Sale of banking operation after consignment
activity spun-off
Consignment Fund - 2012
2011
Frequency Spectrum - Mobile Telephony
Old Athens Airport
Real Estate Investment - Portfolio I
2012
Egnatia Odos Motorway
Ports - Portfolio I
Hellenic Motorways
Regional Airports - Portfolio I
Real Estate Investment - Portfolios II and III
Frequency Spectrum - Digital Dividend I
2013
Regional Airports - Portfolio II
Real Estate Investment - Portfolio IV
100%
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
- 2011
€ 2 - 4 bn
- 2012
€ 5.5 - 7.5 bn
- 2013
€ 4.5 - 5.5 bn
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
9
Slide 11
Infrastructure Investment: Pork Barrel with An EU Twist!
National
Strategic
Reference Framework, 2007-2013
FDI
& Exports
(2007)
Public Supply
Investment
Budget
(2011)
Future
of New
Homes
Slows
€ 40 bn
€ 8.5 bn
100%
GR
€ 7.7
bn
€
€
€ 2.3
2,0 bn
40,8
41%%
From EU
Public
EU
€ 24.3
bn
€ 3.8 bn
59,2%
59%
€ 6.2 bn
7.5
Private
8,5 sources only
From national
40,8
Social Infrastructure
Co-funded with the EU
Economic Infrastructure
Source: State Budget 2011
21.1
57%
31%
8%
3%
13%
3%
27%
12%
12%
4%
9%
5%
1%
3%
7%
100%
Source: Ministry of Finance
Private Public Partnership Projects
Big Projects
Metro (Athens, Salonika)
Construction of new motorways in Attica
Kasteli airport in Crete
Peripheral motorway of Salonika
Photovoltaic park in Kozani
Elefsina –Thiva motorway
Salamina submerged channel
Lefkada submerged tunnel
Thriassio Pedion Logistics Centre
Water management and irrigation
€ 7.9
bn
Basic Infrastructure
Transportation
Telecommunications
Energy
Environment & water
Health
Human Resources
24.3
Education
Training
R&D
Production environment
Industry
Services
Tourism
Other
Total
Budget
2011 onwards
2,065
1,000
800
650
600
400
350
250
150
106
Five Major National Highways - € 8.7 bn
750 kms of new road – 530 kms upgrading of existing road
€ 2.3 bn from state budget + EU funds
€ 2.3 from tolls
€ 3.3 bn from bank loans
€ 0.8 bn from own funds
Toll distribution: 65% to the State reaching 95% after 30 years
State revenues: € 20 bn over 20 years
Social infrastructure projects
€ 600 mn in schools, court houses, police stations
€ 465 mn in waste management and disposal projects
€ 140 mn in urban transport (automation, e-tickets)
10
Slide 12
Foreign Direct Investment: The SSR of Greece in Transition!
Investment Driven Growth (%∆ YoY)
Investment
Driven
Growth
(%∆ (%∆
YoY)YoY)
Investment
Driven
Growth
Net
FDI
inflows
(%
composition)
FDI
Exports
(2007)
FDI&
&
Exports
(2007)
Net FDISupply
Inflowsof New Homes Slows
Future
in € bn
5.0
250
4.3
Other
Manufacturing
Services
Mining
Construction
Agriculture
Utilities
200
4.0
3.1
150
3.0
100
2.0
1.8
1.5
1.7
1.7
50
1.1
1.0
0
0.5
-50
0.0
2003
2004
2005
2006
2007
2008
2009
2003
2010
Source: Bank of Greece
2004
2005
2006
2007
2008
2009
2010
Source: Bank of Greece
Source: Bank of Greece
FDI Inflows
in of
2004-2009
Future
Supply
New Homes Slows
as % of 2004 GDP
40.0
35.0
Fast-track Implementation of Strategic Investments
32.5
32.8
Investments must meet at least one of the following criteria:
Value of project must exceed € 200 mn or
€ 75 mn and it must create 200 new jobs
30.0
25.0
22.3
20.0
17.5
18.9
Project must generate at least € 3 mn of investment
outlays every 3 yrs in areas
15.0
a) of advanced technology and innovation, or
10.0
b) of environmental protection, or
4.4
5.0
c) of education or R&D promotion
0.0
EU-27
Source: Eurostat
Greece
Spain
Portugal
Turkey
China
Project must create over 250 viable & sustainable
new jobs.
Source: www.investingreece.gr
11
Slide 13
Exports: Globalization And Its Discontents!
Goods: Top 10 Exports (2010)
In € mn
Goods: Top 10 destinations
Steel
Copper
Cotton
Military
Equipment
Vegetables
371
€
1010bn
€€
10
1,612
391
392
398
466
985
Fish
753
942
Aluminum
Albania
Albania
Romania
Romania
280
Fruits
Total Exports: € 16.2 bn
Fuels
France
France
Romania
Romania
€ 7 bn
€
Bulgaria
Bulgaria
France
France
F.Y.R.O.M.
F.Y.R.O.M.
USA
USA
Cyprus
Cyprus
UK
Un.
Kingdom
Un.
Kingdom
UK
Turkey
Turkey
Turkey
Turkey
Pharmaceuticals
U.S.A.
U.S.A.
Bulgaria
Bulgaria
Un.Kingdom
Kingdom
Un.
Cyprus
Cyprus
Italy
Italy
Italy
Italy
Germany
Germany
Germany
Germany
2000
2000
Top Ten: € 6.6 bn
2010
2010
Source: Hellenic Board of Exporters, The Greek Economy in Figures (2003), Viohalco
Source: Hellenic Board of Exporters, The Greek Economy in Figures (2003), Viohalco
Ελλάδα:
Exports of
Δαπάνες
Goods και Έσοδα Γενικής Κυβέρνησης
Ελλάδα:
Tourism and
Δαπάνες
Shipping
και (YoY
Έσοδα
%) Γενικής Κυβέρνησης
In € bn
30%
Tourism
5
20%
Exports of Goods
(excluding fuel and ships)
5
4
10%
4
0%
3
-10%
3
Shipping
-20%
2
-30%
2
1
-40%
1
-50%
0
Q1
2008
Q2
2008
Q3
2008
Source: Bank of Greece
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010
Source: Bank of Greece
12
Slide 14
Shipping: Greeks At Their Best!
Shipping
Greek-owned ships
In € bn
World Trade
Volume
20
15%
10%
15
3500
No. of ships
capacity
200
180
3000
160
2500
140
2000
120
5%
0%
10
100
1500
80
-5%
1000
60
-10%
500
40
5
20
0
0
-15%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Shipping Receipts
2000
2001
2002
Greek flag
Imports Of Ships
Source: IMF, Bank of Greece
2003
2004
2005
Foreign flag
2006
2007
2008
2009
deadweight tonnage (mn)
Source: Review of maritime transport reports, UNCTAD
Growth
(%∆ (%∆
YoY)YoY)(σε ΜW)
Driven
Growth
Greek-owned
fleetDriven
by
ship
type
Παραγωγή
Ηλεκτρισμού
FDI Investment
&Investment
Exports
(2007)
Ranking by capacity
(end-2009)
In dwt
(end-2009)
200
150
total fleet capacity (dwt mn)
Ore and Bulk
Carriers
44,8%
Oil Tankers
46,8%
100
50
* Ships greater than 1,000 gt
Source: Review of maritime transport reports, UNCTAD
Singapore
Denmark
China
Norway
USA
Korea
Germany
China
Japan
Greece
-
Container
Ships
4,6%
Other
3,8%
Source: Lloyd’s Register – Fairplay, January 2010
13
Slide 15
Tourism: So Much Potential, So Little To Show For!
Arrivals and Receipts
Tourist arrivals in Greece: Top 10 markets
in € bn
In mn
15
20
Tourist Arrivals
15
10
10
5
5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Tourism Receipts
Germany
UK
France
Italy
USA
Holland
Bulgaria
Austria
Sweden
Belgium
Total (top 10)
Receipts per Arrival ($)
Spain Turkey Greece Egypt Portugal Croatia Cyprus
1,019 833
926
904
785
957
1,030
20%
15%
Average of
Competitors
Source: Association of Greek Tourism Enterprises (SETE)
April
Source: Association of Greek Tourism Enterprises (SETE)
December
Cyprus
November
Croatia
October
Portugal
September
Egypt
March
Greece
Note: Arrivals for Portugal are for 2007
February
0
January
0%
August
10
July
20
June
5%
May
Hotel Capacity (2009)
Beds
Number Share
Five Star Hotels 91,770
13%
Total
732,279 100%
Arrivals (millions)
Turkey
1,836
1,625
732
629
568
483
116
286
224
314
6,813
10%
Receipts ($ bn)
Spain
809
779
783
702
1,077
761
177
812
632
939
754
Greece
40
30
16%
14%
7%
6%
4%
4%
4%
2%
2%
2%
62
Driven
Growth
(%∆by
YoY)
Driven
Growth
(%∆
YoY)(σε ΜW)
Seasonality
(distribution
of arrivals
month)
Παραγωγή
Ηλεκτρισμού
FDI Investment
&Investment
Exports
(2007)
Competition (2009)
50
Share
Total Receipts (2009)
(€ mn)
Source: Greek Tourism 2020, Association of Greek Tourism Enterprises (SETE)
Source: Bank of Greece, Civil Aviation Authority
60
Arrivals from
Expenditure per
journey (€)
14
Slide 16
Construction: The King Is Dead! Long Live The King!
House
and (2007)
Mortgage Growth
FDI
& Price
Exports
Investment
(2000
market
prices)
Future
Supply
of New
Homes
Slows
in € bn
15%
50,000
Non-Residential
37.8
40,000
30,000
29.5 30.9
37.9
33.8
Residential
39.3
45%
Other
Mortgage
Growth
41.5
38.3
35.5
40%
35%
10%
30%
34.0
25%
28.4
5%
Disposable
Income Growth
20,000
20%
21.1
15%
House Price Growth
10%
0%
10,000
24.3
7.5
5%
0%
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Hellenic Statistical Authority
-5%
-5%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Bank of Greece
Residential Investment (2000 market prices)
Net FDISupply
Inflowsof New Homes Slows
Future
in € bn
200,000
200,000
10%
Residential Investment
% of GDP
5.0
Supply of New Homes
Capital Inflows for
House Purchases
4.27
9%
4.0
150,000
150,000
8%
Long-Run
Average
100,000
100,000
7%
3.07
3.0
6%
5%
50,000
50,000
4%
0
0
3%
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
Source: Hellenic Statistical Authority
1.75
1.54
1.69
2.0
1.65
1.13
1.0
0.50
0.08
0.0
2003
0.12
2004
Source: Bank of Greece
0.25
0.17
2005
2006
0.39
2007
0.22
0.15
2008
0.13
2009
2010
15
Slide 17
Green Business: If Only Money Was Not Scarce!
Investment
Driven
Growth
(%∆
YoY)
Electricity
Production
(installed
power
in YoY)
MW)(σε ΜW)
Driven
Growth
(%∆
Παραγωγή
Ηλεκτρισμού
Photovoltaic
FDI
&Investment
Exports
(2007)
Renewable
Energy Sources
Hydrocarbons
Wind Energy
1,976
16%
1,268
18,400
Total no. of turbines
14,4%
15,0%
14%
Petrol
2,146
Natural
Gas
3,456
4,486
Hydroelectric
700
Photovoltaic
939
12%
10,5%
10%
7,610
21,164
8%
1,270
6%
6,250
3,237
Lignite
4,826
1.327
2020
4%
184
3,362
2010
Wind
2%
50Biomass
60
2010
2,490
4,4%
4,237
1,7%
2,1%
UK
Italy
6,5%
0%
2020
Greece
Germany
Ireland
Spain
Portugal
% of national electricity demand from wind
Source: Ministry of environment, energy and climate change
Source: 2009 IEA Wind Annual Report
Green Initiatives Under Implementation
Green Development Program, 2010-2030
Investment Employment
Requirements Creation
€ 31.8 bn
169,000
Management/protection of natural resources € 2.3 bn
11,000
• Air/noise pollution, recycling
Quality of life - respect to the environment
€ 9.5 bn
27,000
Environmental governance
€ 0.9 bn
3,000
Climate change - low carbon economy
• Energy savings, renewables, natural gas
• Biodiversity, water, forests
• Zoning, urban renewal, R&D, innovation
Total
Subsidized program for improving energy efficiency of old
__residential buildings.
New standards of energy efficiency for all building structures.
Green infrastructure – Green Business investment incentives
__schemes
Subsidized electricity tariffs for renewables
€ 44.4 bn
210,000
16
Slide 18
Agrobusiness: Back To The Future!
Exports - Imports
Aquaculture production
In € mn
In € mn
+46%
5,762
700
+18.1%
2000
+39%
2007
600
3,879
3,943
500
+23.4%
-21.4%
400
2,796
300
-21.6%
200
100
0
2000
2008
Exports
2000 2008
Imports
Source: Hellenic Statistical Service., Hellenic Exporters Board
Common Agricultural Policy: a disaster
Greece
Spain
Italy
Portugal
Source: Eurostat
Lambda at ₤ 130 / lt at Harrods
• Since 2003 there has been a moving away from subsidies based
_on production to income support.
•This support is based on acres owned, cultivated or not,
_multiplied by a per-acre subsidy received over a reference past
_period (with special regimes applying for specific products
_cultivated).
• Most kinds of direct income support will be abolished from 2013
_onwards.
• The result: most farmers are unable or unwilling to extricate
_themselves from traditional surplus cultivations.
Source: http://tastelaboratory.wordpress.com (April 2011)
17
Slide 19
Greece’s Got Talent: We Shall Overcome…
Per
GDP
FDIcapita
& Exports
(2007)
Investment
and Fiscal
Consolidation
FDI
& Exports
(2007)
as % of GDP
24%
2010 Greece/Spain: 89.3
2000 Greece/Spain: 86.3
94.3
Spain
84.5
19%
14%
84.2
Greece
9%
72.9
Portugal
70.2
71.1
4%
-1%
2000 Greece/Portugal: 103.9
2010 Greece/Portugal: 118.4
1991
1994
1997
2000
2003
2006
2009
-6%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Private Investment
Source: “Statistical Annex of European Economy, European Commission, Autumn 2010,European
FDI & Exports (2007)
0.78
Primary Surplus (-)
Source: European Commission, Hellenic Statistical Authority
Driven
Growth
(%∆ (%∆
YoY)YoY)
Investment
Driven
Growth
Index
of
health(2007)
and
social
problems
FDI
Exports
FDI&Investment
&
Exports
(2007)
Growth
(%∆ (%∆
YoY)YoY)
Driven
Growth
Human
Development
Index
FDI Investment
&Investment
ExportsDriven
(2007)
Norway 1
Australia 2
N. Zealand 3
USA 4
Ireland 5
Netherlands 7
Canada 8
Sweden 9
Germany 10
Japan 11
Switzerland13
France14
Finland 16
Belgium18
Denmark19
Spain 20
Greece 22
Italy 23
Austria 25
UK 26
Cyprus 35
Portugal 40
Poland 41
Public Investment
Worse
Greece
Spain
Italy
Germany
Portugal
Index of Health and social problems
Per capita GDP (2009)
$ 28,630
$ 31,870
$ 35,080
$ 42,560
•USA
UK
Greece
•New Zealand
Iceland
Austria France
Australia
Germany
Canada
Denmark
•Italy
•Spain
Belgium
Finland
•Switzerland
Norway
Netherlands
•Sweden
•Japan
Better
Low
0.80
0.82
0.84
0.86
Source: “Human Development Report”, United Nations, 2009
0.88
0.90
0.92
0.94
High
Income Inequality
Source: Wlkinson and Pickett (2010), The Spirit Level: Why Equality is Better for Everyone.
18
Greece 2020: Unlocking The Potential Of The Greek Economy
Alpha Bank Lecture
SEESOX
Michael Masourakis
St. Antony’s College
Oxford
Chief Economist
Monday 9 May, 2011
Alpha Bank
Slide 2
Ageing And Unsustainability: Crime And Punishment!
A
pre-crisis
long-run
fiscal scenario 2010-2060
FDI
& Exports
(2007)
Retirement
and Health
Expenditure (as % of GDP)
FDI
&
(2007)
FDI
& Exports
Exports
(2007)
as % of GDP
10%
0%
as % of GDP
Primary
Deficit
Greece
24.1%
Reduction of
expenditure due to the
overhaul of the social
security system
800%
Debt
700%
Interest
Payments
11.7%
Without
measures
600%
14.2%
6.4%
5.0%
-10%
500%
Deficit
-20%
400%
2007
-30%
2060
ΕU-12
300%
11.5%
9.2%
200%
Retirement
Health
6.0%
4.7%
-40%
100%
-50%
0%
2020
2040
2007
2060
Source: IMF, August 2009
2060
Source: European Commission, The 2009 Ageing Report
Deficit, Debt
Ageing Population
as % of GDP
60
Old age dependency ratio
(65+ / (15-64))
57.1
50
154%
143%
51.1
159%
159%
156%
127%
111%
5.6%
40
3.2%
0.9%
30
28.0
24.3
24.3
27.0
21.1
21.1
-4.9%
0
-4.7%
-10.1%
20
10
Time -1.1%
Deposits
> 80
7.5
7.5
6.8
> 80
> 80
> 80
2010
2060
Greece
Source: European Commission, The 2009 Ageing Report
EU-15
-9.8%
-2.6%
63%
-7.6%
-6.5%
2011
2012
-4.8%
-10.5%
2008
-15.4%
2009
2009
2009
2010
2010
Debt
Source: European Commission, Feb.2011
2011
Deificit
2013
2012
2013
2014
2014
Primary Deficit
1
Slide 3
Budgetary Derailment: Spending Other Peoples’ Money!
Primary
Deficit (General
FDI
& Exports
(2007)Government)
Wages
Benefits
/ Taxes and Soc. Sec. Contributions
FDI &and
Exports
(2007)
in € bn
105.5%
96.9%
92.3%
State Budget
Revenues
85.1%
59.5
56.7
50.5
54.3
State Budget Primary-10.8
Current Spending -50.4
State Budget
Investment Spending -9.6
-9.6
Other
-24.0
-58.0
-10.8
-51.7
-52.6
-9.6
-8.4
-10.3
-8.5
-3.8
75.0%
70.1%
77.2%
85.3%
96.9%
85.3%
83.7%
-0.9
-14.5
General Government Primary Deficit
2009
2008
2000
2010
Investment
Driven
Growth
(%∆ (%∆
YoY)YoY)
Tax&Revenue
(2008)
Investment
Driven
Growth
FDI
Exports
(2007)
FDI
&
Exports
(2007)
Goods And
Services
Social Security
Contributions
9.0
3.5
1.8
11.4
3.7
1.9
2.9
3.4
2.8
2.3
10.6
8.3
13.5
12.1
Italy
Spain
9.0
OECD
7.1
10.6
10.8
Greece
2011
Investment Driven Growth (%∆ YoY)
7.5
11.6
12.2
2010
Greece
Public Sector Employees by Economic Sector (2010)
% of GDP
4.7
2.5
1.5
2009
Euro Area
Source: Government Finance Statistics, Eurostat, European Commission, Feb.2011
Source: Budget 2011, Ministry of Finance
Personal
Income
Corporate
Income
Property
2008
2011B
16.1
France
Public Adm. 374.4 th.
Water
8.4 th.
7.2 th.
Libraries, Museums,
Waste Removal
19.4 th.
Electricity
23.1 th.
Education 243.4 th.
Planning Activities
13.5 th.
Postal Services
15.3 th.
Social Welfare
16.5 th.
R&D
5.1 th.
Health 130.4 th.
Telecoms
14.6 th.
Home Care
6.1 th.
Banks
31.9 th.
Radio & TV
4.7 th.
5.2 th.
Sports
Storage
20%
8.3 th.
Transportation 16.9 th. 16%
100%
91%
89%
85%
84%
73%
73%
70%
69%
66%
62%
51%
42%
39%
36%
32%
22 out of 100
employees
in the public sector
Out of the total number of employees of each sector
Source: Revenue Statistics, OECD
Source: Hellenic Statistical Authority
2
Slide 4
Fiscal Consolidation: Seven Lean Years!
Primary Deficit
56
The Fiscal Consolidation Effort, 2011-2015
in € bn
2.9
1.2
2.8
1
0
-2.6
-0.5
-4
-4.6
-9
-8.6
-11.5
-14
-11.6
-12.3
-13.4
Primary Deficit (General Gov.)
-14.4
Primary Deficit (Central Gov.)
Interest Payment
Investment Budget Deficit
Other
2011B
2010
-24.0
2008
-4.6
-10.8
-9.5
-19
-24
-24
-3.6
-5.4
-5.4
-7.5
2009
Source: Budget 2011, Ministry of Finance
49.2%
Other
Interest
Intermediate
Consumption
6.9
5.0
6.4
5.3
7.1
6.1
Compensation 12.1
Of Employees
Social
19.1
Transfers
2007
53.2%
2008
2008
13.5
20.9
2009
2009
9.
10.
11.
12.
13.
Streamlining the Public Wage Bill
Reduction in Operational Expenses
Closure/Merger of Public Entities
Restructuring of State-owned Enterprises
Reduction in Defence Spending
Streamlining Health Expenditures
Streamlining of Pharmaceutical Expenditures
Reduction in Social Security Fund expenditures
and streamlining of other social spending
Strengthening of Tax Compliance
Reduction in Tax Exemptions
Increases in Social Security Fund revenues and
tackling social insurance contribution evasion
Increase in Local government revenues
Other expenditures
Total
% of GDP
0.9%
1.1%
0.5%
1.0%
0.5%
0.5%
0.7%
1.1%
1.5%
0.9%
1.5%
0.3%
0.9%
11.4%
Source: Hellenic Republic, Ministry of Finance, The Medium-Term Fiscal Strategy, 2012-15, 15 April 2011,
http://www.minfin.gr/portal/en/resource/contentObject/id/44f0e4b9-5589-4778-bac0-296bf8ad4856
Driven
Growth
(%∆ (%∆
YoY)YoY)
Investment
Driven
Growth
Revenue
FDI
&Investment
Exports
(2007)
FDI
&
Exports
(2007)
Expenditures
as % of GDP
1.
2.
3.
4.
5.
6.
7.
8.
50.2%
50.3%
5.3
5.1
6.5
6.6
5.3
4.6
12.5
12.5
20.6
2010
2010
21.5
2011
2011
Source: The economic Adjustment Programme for Greece, Third Review, Government Finance Statistics
as % of GDP
39.7%
37.8%
40.6%
6.6
42.7%
7.7
Other
6.2
5.4
Direct Taxes
7.9
8.2
7.9
8.5
Indirect Taxes
12.1
11.1
13.1
13.8
Social Security
13.5
Contribution
13.1
13.0
12.7
2009
2009
2010
2010
2011
2011
2007
2008
2008
Source: The economic Adjustment Programme for Greece, Third Review, Government Finance Statistics
3
Slide 5
Debt Dynamics: Skating On Thin Ice!
Μακροχρόνιες
Προοπτικές
2010-2060
Χωρίς
General
Government
Financing
Requirements
Investment
Driven
Growth
(%∆ (%∆
YoY)
Εισροές
Ξένων(2007)
Άμεσων
Επενδύσεων
Investment
Driven
Growth
YoY)
ΔΝΤ:
Έλλειμμα,
Χρέος
και
Ονομαστικό
ΑΕΠ
FDI
&
Exports
FDI
&
Exports
(2007)
FDI
Exports
Μεταρρυθμίσεις
and
Sources
(without(2007)
€ 110 bn maturity extension)
Refinancing Needs
€ bn
80
With € 110 bn
3 ½ years maturity
Troika
60
Amortization
Market
Access
40
Interest
24.3
21.1
20
Primary
Deficit
Other
Other
0
7.5
With € 110 bn
7 ½ years maturity
2014
2013
2011
20
13
2012
20
09
2009
20
2010
11
2014
20
09
2009
22010
01
1
2011
20
2012
13
2013
-20
Source: IMF, March 2011
Source: The economic Adjustment Programme for Greece, Third Review
Public Debt Sustainability Scenarios
Privatization
Strengthens Debt
Sustainability
Public
Debt Sustainability
Analysis
as % of GDP
as % of GDP
1 p.p lower primary
deficit
170
170
No privatizations
150
150
€ 11,8 δις
Baseline
Scenario
130
110
130
110
1 p.p. higher
growth
90
Privatizations
€ 50 bn in 2011-2015
90
70
70
2006
2008
2010
2012
2014
2016
2018
2020
2006
2008
2010
2012
2014
2016
2018
2020
* Nominal growth rate: 3,5% * Primary surplus: 5,5%
Source: The economic Adjustment Programme for Greece, IMF
Source: IMF, March 2011
4
Slide 6
Banking: Good Banks, Wrong Place, Wrong Time!
Public
Private
Debt
FDI
& and
Exports
(2007)
Private sector loans and deposits
as % of GDP
Loans / Deposits - 125%
Loans / GDP - 112%
300
Households
250
Businesses
State
%
25
200
20
150
15
Finland
Germany
France
Austria
Italy
Belgium
0
Greece
0
Spain
5
Netherlands
50
Ireland
10
Portugal
100
Loans to the private sector (yoy Δ%)
-5
Private sector deposits (yoy Δ%)
-10
-15
Jan-04
Source: Thomson Datastream, Credit Suisse, Capital Economics, Alpha Bank Research
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Source: Bank of Greece
Capital adequacy
ECB Funding
€ bn
160
Core Tier 1 capital ratio
Portugal
140
12.0%
Ireland
120
9.6%
242%
10.2%
237%
Greece
100
Spain
183%
9.2%
80
102%
16,4x
60
19,0x
24,7x
18,1x
40
20
Alpha Bank
0
2005
2006
2007
Source: National Central Banks, ECB, IIF calculations
2008
2009
Peer 1
Peer 2
Total Assets / Tangible Equity GGBs/Core Tier I
Peer 3
2010
Source: Financial reports and presentations of banks
5
Slide 7
Structural Rigidities: Atlas Overwhelmed!
Doing Business Rankings
Competitiveness Index Scores
GR
109
UK
4
Starting a business
149
17
Protecting investors
154
10
Getting credit
89
2
Dealing with construction permits
51
16
153
22
Paying taxes
74
16
Trading across borders
84
15
Enforcing contracts
88
23
Closing a business
49
7
Ease of doing business
Registering property
Best score: 7
Basic requirements
Institutions
Infrastructure
Macroeconomic environment
Health and primary education
Efficiency enhancers
Higer education and training
Goods market efficiency
Labor market efficiency
Financial marekt development
Technological readiness
Market size
Innovation and sophisticaltion factors
Business sophistication
Innovation
Governance
Corruption
2009-2010
6,6
6,0
5,8
5,7
5,3
5,2
4,7
4,0
3,8
1 = very common
7 = never occurs
3,2
3,1
2,9
2,3
2,0
UK
5.58
5.28
5.88
4.76
6.40
5.28
5.34
4.96
5.29
4.73
5.58
5.80
4.98
5.32
4.65
Source: The Global Competitiveness Report 2010-2011, World Economic Forum
Source: Doing Business 2011, World Bank, International Finance Corporation
New Zealand 1
Hong Kong 8
UK 11
Germany 14
Ireland 21
Japan 27
USA 34
Spain 50
China 55
India 71
Italy 77
Greece 94
Brazil 121
GR
4.49
3.67
4.57
3.61
6.13
4.12
4.67
3.91
3.71
3.88
4.06
4.52
3.41
3.83
3.00
2,5
3,0
3,5
4,0
4,5
5,0
5,5
6,0
Source: The Global Competitiveness Report 2010-2011, World Economic Forum.
6,5
7,0
1. Finland
3. New Zealand
5. Denmark
14. United Kingdom
36. Portugal
72. Greece
Greece
72.
80. Italy
90. Turkey
95. India
99. Bulgaria
117. China
123. Serbia
137. Albania
163. Russia
172. Pakistan
213. Somalia -2.53
-3
1.94
1.91
1.87
1.71
1.04
0.64
0.39
0.12
0.05
-0.05
-0.41
-0.35
-0.52
-0.77
-0.93
-2
Source: Governanance Indicators, World Bank
-1
0
1
2
3
6
Slide 8
Structural Reform: Greece In The Reformatory!
LabourSupply
marketof New Homes Slows
Future
Minimum wage down by 16%
Extension of probation period for new jobs to 1 yr.
Arbitration system: symmetric access & independence
Firm-level agreements over sectoral/occupational
Elimination of the possibility of the MoL to extend sectoral
__& occupational collective agreements
Reduction in over-time payment for part-time jobs
Increase in temporal limits in use of temporary working
__agencies
Tackle undeclared work
Source: Economic Reviews, European Commission
Liberalization
Future
Supply of professions
New Homes Slows
Impacts 160 services sectors
Investment Driven Growth (%∆ YoY)
Driven
Growth
(%∆ (%∆
YoY)YoY)
Investment
Driven
Growth
Pension
reform(2007)
FDI
Exports
FDI&Investment
&
Exports
(2007)
Containment of the long-run increase in pension costs
__from 12.5 to under 2.5 pps of GDP
Retirement age for males and females at 65 yrs by 2015 –
__increasing in line with life expectancy after 2020
Pensions freeze for 2010-2013
Pension funds will be merged in three by 2018
Updated long term projections for pension expenditure by
__March 2011
Reform of the functioning of supplementary pension funds
Source: Economic Reviews, European Commission
State Owned Enterprises – Local Authorities
SOEs will be audited on a quarterly basis
General prohibition of unjustified restrictions
The MoF’s special secretariat for SOEs is charged with the
__overview of the restructuring
Special legislative action for the liberalisation of the
__profession of notaries, lawyers, architects, mechanics and
__actuaries
The MoF will revise Law 3429/05 on SOEs to ensure sound
__corporate governance
Legislative action by the MoH for the liberalisation of the
__profession of pharmacists
Expected positive effects amounting to gains in GDP of
__over 10% in the long run and a downward effect on prices
__of around 7.2%.
Source: Economic Reviews, European Commission
Horizontal wage cut by 10% (+ wage ceiling)
Ceiling for extra payments at 10% of wage expenditure
Number of municipalities reduced to 325 from 1,034;
__54 prefectures dissolved (their powers transferred to the
__existing 13 peripheries)
Source: Economic Reviews, European Commission
7
Slide 9
Key Privatization Initiatives: Ambitious Greece!
Development of real estate assets
Registration and evaluation in a Single Land Registry.
Surface rights and long-term leaseholds legally established.
Conditions for holiday and tourist accommodation and property
__development defined.
Zoning and building conditions for large properties expedited
__(fast track procedures).
Individual specialized portfolios of large properties to be established in
__a National Sovereign Fund of Public Land.
Airports – Ports – Roads
Extension of the duration of the concession agreement for Athens
__International Airport ( AIA) and gradual sale of government stake.
Corporatization of all (29) regional airports to attract private capital /
__know-how to upgrade operations (similar structure to AIA_concession).
Public Private Partnership structures to develop the Attica Port
__System (Peiraieus-Rafinia-Lavrio) and 12 other regional ports to
__upgrade facilities.
Private investment structures to equip marinas with modern tourist
__infrastructure.
Portfolios to be structured as Special Purpose Vehicles for sale in
__global markets.
Operation, maintenance and toll rights for existing motorways to be
__assigned to private investors on a concession basis (Egnatia Odos
__Motorway by end-2011).
Four portfolios to be delivered (one every six months from June 2011)
A special Purpose Vehicle with the rights to future toll revenues from
__motorways will be set up and sold to private investors.
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
Telecommunications – Broadband
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
Energy – Gaming
Creation of a modern and wide fiber optic cable network
Reduction of state’s equity holding in Public Power Corporation
__(DEH) and in Public Gas Company (DEPA) to 34% in 2011-2012).
Development of a modern telecoms broadband and digital
__infrastructure utilizing the frequency spectrum and digital dividend
__(starting in 2012).
Development of undersea gas storage facilities through foreign
__investment in 2011-2012.
Extension of mobile telecommunications licenses (in 2011).
Selection of a strategic investor in Hellenic Post to take operational
__control of nationwide services (starting in 2012).
Reduction of state’s participation in the Hellenic
__Telecommunication Organization.
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
Sale of nickel mining company (LARCO) in 2011.
Regulation of the gaming market (including e-gaming) in 2011.
Extension of the concession agreement for gaming/football
__prognostics and issue of new licenses for e-gaming to OPAP.
Full privatization of OPAP (2012), Parnitha Casino (2011), State
__lotteries (2011), Horse Racing (2012).
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
8
Slide 10
Privatisation: The Triumph of Hope Over Experience?
Trade Sales to Strategic Investors
Sale of Concessions SPV
% owned
2011
Hellenic Defense Systems
Railroads (TRAINOSE)
Nickel mining (LARCO)
Hellenic Horse Racing Corporation
Casino of Parnitha (Mont Parnes)
2012
Hellenic Post (ELTA)
Athens Water and Sewerage (EYDAP)
Thessaloniki Water and Sewerage (EYATH)
Hellenic Vehicle Industry (ELBO)
Hellenic Football Prognostics Organization (OPAP)
2013
Agricultural Bank of Greece
Hellenic Postbank
Value
100%
100%
55%
100%
49%
90%
61%
74%
51%
34%
€ 1,659 mn
76%
34%
€ 385 mn
€ 314 mn
€ 370 mn
€ 139 mn
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
Estimated Revenue: € 12-17 bn in 2011-2013
Other Initiatives
% owned
Value
Potential up to 2015
Sale of Shares
Public Gas Corporation (DEPA) - 2011
65%
Hellenic Telecomms (OTE) - 2011
16%
€ 621 mn
Public Power Corporation (DEH) - 2012
51%
€ 1,388 mn
Partial Privatization and Introduction of
Stragegic Investors
State Lottery Tickets - 2011
- € 10 - 15 bn from enterprises and infrastructure
- € 25 - 35 bn from strategic management of rights and
real estate asset development
Timing
100%
Sale of banking operation after consignment
activity spun-off
Consignment Fund - 2012
2011
Frequency Spectrum - Mobile Telephony
Old Athens Airport
Real Estate Investment - Portfolio I
2012
Egnatia Odos Motorway
Ports - Portfolio I
Hellenic Motorways
Regional Airports - Portfolio I
Real Estate Investment - Portfolios II and III
Frequency Spectrum - Digital Dividend I
2013
Regional Airports - Portfolio II
Real Estate Investment - Portfolio IV
100%
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
- 2011
€ 2 - 4 bn
- 2012
€ 5.5 - 7.5 bn
- 2013
€ 4.5 - 5.5 bn
Source: Greek medium term fiscal strategy (2012-201), Ministry of Finance
9
Slide 11
Infrastructure Investment: Pork Barrel with An EU Twist!
National
Strategic
Reference Framework, 2007-2013
FDI
& Exports
(2007)
Public Supply
Investment
Budget
(2011)
Future
of New
Homes
Slows
€ 40 bn
€ 8.5 bn
100%
GR
€ 7.7
bn
€
€
€ 2.3
2,0 bn
40,8
41%%
From EU
Public
EU
€ 24.3
bn
€ 3.8 bn
59,2%
59%
€ 6.2 bn
7.5
Private
8,5 sources only
From national
40,8
Social Infrastructure
Co-funded with the EU
Economic Infrastructure
Source: State Budget 2011
21.1
57%
31%
8%
3%
13%
3%
27%
12%
12%
4%
9%
5%
1%
3%
7%
100%
Source: Ministry of Finance
Private Public Partnership Projects
Big Projects
Metro (Athens, Salonika)
Construction of new motorways in Attica
Kasteli airport in Crete
Peripheral motorway of Salonika
Photovoltaic park in Kozani
Elefsina –Thiva motorway
Salamina submerged channel
Lefkada submerged tunnel
Thriassio Pedion Logistics Centre
Water management and irrigation
€ 7.9
bn
Basic Infrastructure
Transportation
Telecommunications
Energy
Environment & water
Health
Human Resources
24.3
Education
Training
R&D
Production environment
Industry
Services
Tourism
Other
Total
Budget
2011 onwards
2,065
1,000
800
650
600
400
350
250
150
106
Five Major National Highways - € 8.7 bn
750 kms of new road – 530 kms upgrading of existing road
€ 2.3 bn from state budget + EU funds
€ 2.3 from tolls
€ 3.3 bn from bank loans
€ 0.8 bn from own funds
Toll distribution: 65% to the State reaching 95% after 30 years
State revenues: € 20 bn over 20 years
Social infrastructure projects
€ 600 mn in schools, court houses, police stations
€ 465 mn in waste management and disposal projects
€ 140 mn in urban transport (automation, e-tickets)
10
Slide 12
Foreign Direct Investment: The SSR of Greece in Transition!
Investment Driven Growth (%∆ YoY)
Investment
Driven
Growth
(%∆ (%∆
YoY)YoY)
Investment
Driven
Growth
Net
FDI
inflows
(%
composition)
FDI
Exports
(2007)
FDI&
&
Exports
(2007)
Net FDISupply
Inflowsof New Homes Slows
Future
in € bn
5.0
250
4.3
Other
Manufacturing
Services
Mining
Construction
Agriculture
Utilities
200
4.0
3.1
150
3.0
100
2.0
1.8
1.5
1.7
1.7
50
1.1
1.0
0
0.5
-50
0.0
2003
2004
2005
2006
2007
2008
2009
2003
2010
Source: Bank of Greece
2004
2005
2006
2007
2008
2009
2010
Source: Bank of Greece
Source: Bank of Greece
FDI Inflows
in of
2004-2009
Future
Supply
New Homes Slows
as % of 2004 GDP
40.0
35.0
Fast-track Implementation of Strategic Investments
32.5
32.8
Investments must meet at least one of the following criteria:
Value of project must exceed € 200 mn or
€ 75 mn and it must create 200 new jobs
30.0
25.0
22.3
20.0
17.5
18.9
Project must generate at least € 3 mn of investment
outlays every 3 yrs in areas
15.0
a) of advanced technology and innovation, or
10.0
b) of environmental protection, or
4.4
5.0
c) of education or R&D promotion
0.0
EU-27
Source: Eurostat
Greece
Spain
Portugal
Turkey
China
Project must create over 250 viable & sustainable
new jobs.
Source: www.investingreece.gr
11
Slide 13
Exports: Globalization And Its Discontents!
Goods: Top 10 Exports (2010)
In € mn
Goods: Top 10 destinations
Steel
Copper
Cotton
Military
Equipment
Vegetables
371
€
1010bn
€€
10
1,612
391
392
398
466
985
Fish
753
942
Aluminum
Albania
Albania
Romania
Romania
280
Fruits
Total Exports: € 16.2 bn
Fuels
France
France
Romania
Romania
€ 7 bn
€
Bulgaria
Bulgaria
France
France
F.Y.R.O.M.
F.Y.R.O.M.
USA
USA
Cyprus
Cyprus
UK
Un.
Kingdom
Un.
Kingdom
UK
Turkey
Turkey
Turkey
Turkey
Pharmaceuticals
U.S.A.
U.S.A.
Bulgaria
Bulgaria
Un.Kingdom
Kingdom
Un.
Cyprus
Cyprus
Italy
Italy
Italy
Italy
Germany
Germany
Germany
Germany
2000
2000
Top Ten: € 6.6 bn
2010
2010
Source: Hellenic Board of Exporters, The Greek Economy in Figures (2003), Viohalco
Source: Hellenic Board of Exporters, The Greek Economy in Figures (2003), Viohalco
Ελλάδα:
Exports of
Δαπάνες
Goods και Έσοδα Γενικής Κυβέρνησης
Ελλάδα:
Tourism and
Δαπάνες
Shipping
και (YoY
Έσοδα
%) Γενικής Κυβέρνησης
In € bn
30%
Tourism
5
20%
Exports of Goods
(excluding fuel and ships)
5
4
10%
4
0%
3
-10%
3
Shipping
-20%
2
-30%
2
1
-40%
1
-50%
0
Q1
2008
Q2
2008
Q3
2008
Source: Bank of Greece
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010
Source: Bank of Greece
12
Slide 14
Shipping: Greeks At Their Best!
Shipping
Greek-owned ships
In € bn
World Trade
Volume
20
15%
10%
15
3500
No. of ships
capacity
200
180
3000
160
2500
140
2000
120
5%
0%
10
100
1500
80
-5%
1000
60
-10%
500
40
5
20
0
0
-15%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Shipping Receipts
2000
2001
2002
Greek flag
Imports Of Ships
Source: IMF, Bank of Greece
2003
2004
2005
Foreign flag
2006
2007
2008
2009
deadweight tonnage (mn)
Source: Review of maritime transport reports, UNCTAD
Growth
(%∆ (%∆
YoY)YoY)(σε ΜW)
Driven
Growth
Greek-owned
fleetDriven
by
ship
type
Παραγωγή
Ηλεκτρισμού
FDI Investment
&Investment
Exports
(2007)
Ranking by capacity
(end-2009)
In dwt
(end-2009)
200
150
total fleet capacity (dwt mn)
Ore and Bulk
Carriers
44,8%
Oil Tankers
46,8%
100
50
* Ships greater than 1,000 gt
Source: Review of maritime transport reports, UNCTAD
Singapore
Denmark
China
Norway
USA
Korea
Germany
China
Japan
Greece
-
Container
Ships
4,6%
Other
3,8%
Source: Lloyd’s Register – Fairplay, January 2010
13
Slide 15
Tourism: So Much Potential, So Little To Show For!
Arrivals and Receipts
Tourist arrivals in Greece: Top 10 markets
in € bn
In mn
15
20
Tourist Arrivals
15
10
10
5
5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Tourism Receipts
Germany
UK
France
Italy
USA
Holland
Bulgaria
Austria
Sweden
Belgium
Total (top 10)
Receipts per Arrival ($)
Spain Turkey Greece Egypt Portugal Croatia Cyprus
1,019 833
926
904
785
957
1,030
20%
15%
Average of
Competitors
Source: Association of Greek Tourism Enterprises (SETE)
April
Source: Association of Greek Tourism Enterprises (SETE)
December
Cyprus
November
Croatia
October
Portugal
September
Egypt
March
Greece
Note: Arrivals for Portugal are for 2007
February
0
January
0%
August
10
July
20
June
5%
May
Hotel Capacity (2009)
Beds
Number Share
Five Star Hotels 91,770
13%
Total
732,279 100%
Arrivals (millions)
Turkey
1,836
1,625
732
629
568
483
116
286
224
314
6,813
10%
Receipts ($ bn)
Spain
809
779
783
702
1,077
761
177
812
632
939
754
Greece
40
30
16%
14%
7%
6%
4%
4%
4%
2%
2%
2%
62
Driven
Growth
(%∆by
YoY)
Driven
Growth
(%∆
YoY)(σε ΜW)
Seasonality
(distribution
of arrivals
month)
Παραγωγή
Ηλεκτρισμού
FDI Investment
&Investment
Exports
(2007)
Competition (2009)
50
Share
Total Receipts (2009)
(€ mn)
Source: Greek Tourism 2020, Association of Greek Tourism Enterprises (SETE)
Source: Bank of Greece, Civil Aviation Authority
60
Arrivals from
Expenditure per
journey (€)
14
Slide 16
Construction: The King Is Dead! Long Live The King!
House
and (2007)
Mortgage Growth
FDI
& Price
Exports
Investment
(2000
market
prices)
Future
Supply
of New
Homes
Slows
in € bn
15%
50,000
Non-Residential
37.8
40,000
30,000
29.5 30.9
37.9
33.8
Residential
39.3
45%
Other
Mortgage
Growth
41.5
38.3
35.5
40%
35%
10%
30%
34.0
25%
28.4
5%
Disposable
Income Growth
20,000
20%
21.1
15%
House Price Growth
10%
0%
10,000
24.3
7.5
5%
0%
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Hellenic Statistical Authority
-5%
-5%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Bank of Greece
Residential Investment (2000 market prices)
Net FDISupply
Inflowsof New Homes Slows
Future
in € bn
200,000
200,000
10%
Residential Investment
% of GDP
5.0
Supply of New Homes
Capital Inflows for
House Purchases
4.27
9%
4.0
150,000
150,000
8%
Long-Run
Average
100,000
100,000
7%
3.07
3.0
6%
5%
50,000
50,000
4%
0
0
3%
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
Source: Hellenic Statistical Authority
1.75
1.54
1.69
2.0
1.65
1.13
1.0
0.50
0.08
0.0
2003
0.12
2004
Source: Bank of Greece
0.25
0.17
2005
2006
0.39
2007
0.22
0.15
2008
0.13
2009
2010
15
Slide 17
Green Business: If Only Money Was Not Scarce!
Investment
Driven
Growth
(%∆
YoY)
Electricity
Production
(installed
power
in YoY)
MW)(σε ΜW)
Driven
Growth
(%∆
Παραγωγή
Ηλεκτρισμού
Photovoltaic
FDI
&Investment
Exports
(2007)
Renewable
Energy Sources
Hydrocarbons
Wind Energy
1,976
16%
1,268
18,400
Total no. of turbines
14,4%
15,0%
14%
Petrol
2,146
Natural
Gas
3,456
4,486
Hydroelectric
700
Photovoltaic
939
12%
10,5%
10%
7,610
21,164
8%
1,270
6%
6,250
3,237
Lignite
4,826
1.327
2020
4%
184
3,362
2010
Wind
2%
50Biomass
60
2010
2,490
4,4%
4,237
1,7%
2,1%
UK
Italy
6,5%
0%
2020
Greece
Germany
Ireland
Spain
Portugal
% of national electricity demand from wind
Source: Ministry of environment, energy and climate change
Source: 2009 IEA Wind Annual Report
Green Initiatives Under Implementation
Green Development Program, 2010-2030
Investment Employment
Requirements Creation
€ 31.8 bn
169,000
Management/protection of natural resources € 2.3 bn
11,000
• Air/noise pollution, recycling
Quality of life - respect to the environment
€ 9.5 bn
27,000
Environmental governance
€ 0.9 bn
3,000
Climate change - low carbon economy
• Energy savings, renewables, natural gas
• Biodiversity, water, forests
• Zoning, urban renewal, R&D, innovation
Total
Subsidized program for improving energy efficiency of old
__residential buildings.
New standards of energy efficiency for all building structures.
Green infrastructure – Green Business investment incentives
__schemes
Subsidized electricity tariffs for renewables
€ 44.4 bn
210,000
16
Slide 18
Agrobusiness: Back To The Future!
Exports - Imports
Aquaculture production
In € mn
In € mn
+46%
5,762
700
+18.1%
2000
+39%
2007
600
3,879
3,943
500
+23.4%
-21.4%
400
2,796
300
-21.6%
200
100
0
2000
2008
Exports
2000 2008
Imports
Source: Hellenic Statistical Service., Hellenic Exporters Board
Common Agricultural Policy: a disaster
Greece
Spain
Italy
Portugal
Source: Eurostat
Lambda at ₤ 130 / lt at Harrods
• Since 2003 there has been a moving away from subsidies based
_on production to income support.
•This support is based on acres owned, cultivated or not,
_multiplied by a per-acre subsidy received over a reference past
_period (with special regimes applying for specific products
_cultivated).
• Most kinds of direct income support will be abolished from 2013
_onwards.
• The result: most farmers are unable or unwilling to extricate
_themselves from traditional surplus cultivations.
Source: http://tastelaboratory.wordpress.com (April 2011)
17
Slide 19
Greece’s Got Talent: We Shall Overcome…
Per
GDP
FDIcapita
& Exports
(2007)
Investment
and Fiscal
Consolidation
FDI
& Exports
(2007)
as % of GDP
24%
2010 Greece/Spain: 89.3
2000 Greece/Spain: 86.3
94.3
Spain
84.5
19%
14%
84.2
Greece
9%
72.9
Portugal
70.2
71.1
4%
-1%
2000 Greece/Portugal: 103.9
2010 Greece/Portugal: 118.4
1991
1994
1997
2000
2003
2006
2009
-6%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Private Investment
Source: “Statistical Annex of European Economy, European Commission, Autumn 2010,European
FDI & Exports (2007)
0.78
Primary Surplus (-)
Source: European Commission, Hellenic Statistical Authority
Driven
Growth
(%∆ (%∆
YoY)YoY)
Investment
Driven
Growth
Index
of
health(2007)
and
social
problems
FDI
Exports
FDI&Investment
&
Exports
(2007)
Growth
(%∆ (%∆
YoY)YoY)
Driven
Growth
Human
Development
Index
FDI Investment
&Investment
ExportsDriven
(2007)
Norway 1
Australia 2
N. Zealand 3
USA 4
Ireland 5
Netherlands 7
Canada 8
Sweden 9
Germany 10
Japan 11
Switzerland13
France14
Finland 16
Belgium18
Denmark19
Spain 20
Greece 22
Italy 23
Austria 25
UK 26
Cyprus 35
Portugal 40
Poland 41
Public Investment
Worse
Greece
Spain
Italy
Germany
Portugal
Index of Health and social problems
Per capita GDP (2009)
$ 28,630
$ 31,870
$ 35,080
$ 42,560
•USA
UK
Greece
•New Zealand
Iceland
Austria France
Australia
Germany
Canada
Denmark
•Italy
•Spain
Belgium
Finland
•Switzerland
Norway
Netherlands
•Sweden
•Japan
Better
Low
0.80
0.82
0.84
0.86
Source: “Human Development Report”, United Nations, 2009
0.88
0.90
0.92
0.94
High
Income Inequality
Source: Wlkinson and Pickett (2010), The Spirit Level: Why Equality is Better for Everyone.
18