Greece will not restructure its debt and will restore market confidence, counting on foreign investment to turn around its debt-ridden economy, its economy minister said.
The euro-zone's weakest member is imposing tough measures in an aid-for-pain deal with the EU and the IMF to cut ballooning deficits and debt amid its first recession in 16 years.
Economy Minister Louka Katseli told Reuters in an interview late on Thursday the key to boosting the economy was foreign investment and the ministry was working hard to tap interest around the world, including China and the Middle East.
"The locomotive for growth in 2011-12 and onwards will not be consumption, as was the case in the past, especially on borrowed money. We anticipate that it will be private investment and exports," Katseli said.
She has a tough task ahead. Greece ranks 46th in a competitiveness survey of 58 developed countries by the International Institute for Management Development (IMD) and businessmen often complain of crippling bureaucracy and endemic corruption.
Investors, concerned that Greece may eventually be forced to restructure its debt despite draconian austerity measures, will be gradually convinced of the country's credibility as the business climate changes and competitiveness improves, she said.
"Greece will have no problem financing its debt," she said. "It is a reliable partner."
Katseli denied her government would try to renegotiate the EU/IMF deal, which requires wage cuts, tax hikes and pension reforms in exchange for 110 billion euros in loans. The labour minister said earlier this week he would try to delay the full implementation of pension reforms.
"There is no desire or possibility to renegotiate," Katseli said. "The memorandum was signed by the government, we are all signatories and every ministry is implementing its programme."
RETURN TO MARKETS
The Socialist government won elections in October on pledges to tax the rich and help the poor but revelations of a huge budget deficit plunged Greece into a debt crisis that shook international markets.
With costs on its 300 billion euro debt rising to prohibitive levels, Greece was forced to turn to its international partners for help. The finance ministry has said the aid package ensures Athens can stay away from markets until early 2012 although it would like to return earlier than that.
"I do not rule it out for next year," Katseli said.
The measures, including VAT and excise tax hikes, have fed inflation and hit ordinary people, who have taken to the streets in violent protests. Economists say the mix may not be enough to shave off 5 percentage points this year from a 2009 budget deficit of 13.6 percent of GDP.
"There is no need now to take extra measures. Our effort at this moment is focused on implementing the measures we are committed to," Katseli said.
Apart from simplifying procedures for setting up shop in Greece, opening up professions and cutting bureaucracy, her ministry aims to increase its absorption rate of available EU funds from 3.2 percent when the government took power in October to 15 percent by the end of the year.
Katseli aims to increase foreign direct investment (FDI), which was negative in the past two years as business fled to the Balkans, to positive growth this year.
Apart from the direct sale of assets, such as the Mount Parness Casino, Greece will float more state companies. Areas such as renewable energy, upscale tourism, transportation networks and biotechology attract the most interest, she said.
She said that beyond deals like the one with China's Cosco, which manages part of Greece's biggest port, there is a one billion euro power plant and natural gas terminal deal with Qatar Petroleum.
"We are proceeding with many cooperations and roadshows, not to sell bonds but to attract investment," she said.
