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Chronology of main economic events, 1990.

Annex III Chronology of main economic events

1990

January

ATA wage increase set at 5.8 per cent for the first four months of 1990.

Mr. Souflias (Minister for National Economy) declares that, out of the Dr.350 billion in tax arrears Dr.150 billion are owed by the officially classified problematic companies.

New issue of government bonds in ECUs at a 12 per cent interest rate (tax free), 1 percentage point above Euro rates.

Structural funds amounting to ECU 6.7 billion (Dr.1200 billion) are allocated to Greece for the four-year period to 1993.

February

Following a strike, workers of the Public Power Corporation obtain a 8.3 per cent wage increase (2.5 points above ATA).

The interest rate on 3-month treasury bills is raised from 17 to 18 per cent, on 6-month bills from 18 to 19 per cent and on 12-month bills from 20 to 21 per cent.

The interest rate on 2-year government bonds is raised from 21 to 22 per cent and on 3-year bonds from 22 to 22.5 per cent.

Price controls on beer, veterinary medicines and school supplies are abolished.

Following several strikes, bank clerks obtain a 8.9 per cent wage increases (3.1 points above ATA).

March

Bank of Greece announces the targets for 1990: 15-16 per cent for credit expansion to the private sector and 19-21 per cent for M3.

Bank of Greece introduces the sale by auction of treasury bills to credit institutions, with or without repurchase agreements.

Effective 31 March, compulsory investments of commercial banks in treasury bills and government bonds are increased from 39 to 40 per cent of their deposit liabilities.

The requirement on commercial banks to earmark a percentage of their deposits for the financing of public enterprises and organisations is lowered from 10.5 to 9.5 per cent as from 30 April and to 9 per cent as from 31 May.

Effective 31 March, the reserve requirement applying on deposits with the Agricultural Bank is increased from 3.5 to 4.5 per cent.

Effective 1 April, minimum interest rates on short-term and long-term loans are raised by one percentage point to 18 per cent and 17 per cent, respectively, and interest on the overdrafts of banks on their current accounts with Bank of Greece is increased from 22.5-27 per cent to 24.5-29 per cent.

The interest rate on 6-month treasury bills is raised from 19 to 19.5 per cent and on 12-months bills from 21 to 22 per cent, while it remains unchanged (18 per cent) on 3-month bills. The interest rate on 2-year government bonds is raised from 22 to 22.5 per cent and on 3-year bonds from 22.5 to 23 per cent.

Companies in the services sector are allowed to borrow in foreign exchange from foreign and domestic institutions, without prior approval by the Bank of Greece, on the same terms and conditions as for manufacturing, mining, hotel and trade enterprises.

Commercial banks are authorised to underwrite new share or bond issues, without prior approval by the Bank of Greece, provided that any part of the issue not absorbed by the public is sold by the bank within 12 months of the date of underwriting. Previously only investment banks were authorised to engage in underwriting.

Apart from the officially classified problematic enterprises, there are also some 300 ailing firms, with debts exceeding Dr.150 billions, which have never been brought under IRO management.

April

Following the 8th April elections, a new government led by the New Democracy is formed. Mr. Mitsotakis, the Prime Minister, presents the new programme to Parliament.

Companies in the services sector, with revenues in foreign exchange compulsorily surrendered to the Bank of Greece, are allowed to have deposit accounts in foreign exchange with commercial banks, on the same terms and conditions as for goods' exporting firms.

Credit institutions are authorised to invest in existing corporate shares or units of mutual funds without prior approval by the Bank of Greece, on certain terms and conditions. Previously, they were allowed to invest in new share issues only.

May

The interest rate on 12-month treasury bills is raised from 22 to 23 per cent, while it remains unchanged on 3-month and 6-month bills (18 and 19.5 per cent, respectively). The interest rate on 2-year government bonds is raised from 22.5 to 23.25 per cent and on 3-year bonds from 23 to 23.5 per cent.

State subsidies on housing loans are substantially reduced (to 5 points of interest).

Plans to liberalise the labour market are announced:

- a "fourth" work shift to be created;

- temporary and part-time jobs to be introduced;

- dismissals of staff limited (still) at 2 per cent per month as a maximum.

The government decides not to increase wages (ATA) during the May-August period.

The 1990 budget is finalised:

- receipts Dr.3460 (40 per cent above 1989)

- current expenditure 5530 (30 per cent above 1989)

- PSBR 19.6 per cent of GDP (20.4 per cent in 1989)

- PSBR of 10 per cent of GDP by 1992.

June

Amendment to law on unfair competition is adopted, so as to impose more restrictive conditions for mergers in the services sector.

Interest rates on 3-month, 6-month and one year treasury bills are raised by one point to 19 per cent, 20.5 per cent and 24 per cent respectively.

Interest rates on 2-year and 3-year government bonds are raised by one point to 24.25 per cent and 24.5 per cent respectively.

The minimum endowment capital required for the granting of a license for the establishment and operation in Greece of a branch of an EC credit institution authorised in its home member-state is set at the 50 per cent of the minimum share capital required for the granting of a license for the establishment and operation of Greek credit institutions. Already established credit institutions in Greece, authorised in any other EC member-state, may make use of this provision provided they wish to expand their branch network and they have not imported the required capital yet.

Government asks permission to the EC for a postponement of liberalisation of movements.

Law on "economic development" is adopted:

- liberalising shopping hours and labour market conditions;

- introducing a new system of grants and subsidies for promoting investment;

- raising the duration of unemployment benefits to 12 months (from 7);

- partly freeing state controlled commercial banks and their subsidiary companies

from the rigid bureaucratic rules applying to the central government;

- lifting the prohibition for the establishment of private clinics, hospitals and

nursing homes;

- limiting to a maximum of three signatures on official documents compared

with more than 6 before;

- restoring the rank of Director-General in Ministries to be filled by career civil

servants;

- providing incentives for companies to have their shares quoted on the Stock

Exchange.

July

Effective 6 July, the minimum interest rate on savings deposits with credit institutions is increased from 16 to 18 per cent; the minimum interest rates on short-term and long-term loans are raised by 2 percentage points to 20 and 19 per cent, respectively; and interest on the overdrafts of banks on their current accounts with the Bank of Greece is increased from 24.5-29 per cent to 26-30 per cent.

The EC Commission imposed a limit until end of 1990 for lifting all restrictions on the purchase by Greek citizens of foreign and EC titles and on the amount of foreign exchange Greeks may take with them when travelling abroad. The Greek Government had asked for a 30th June 1991 deadline.

August

Individuals and legal entities are allowed to participate in the auctions of treasury bills by the Bank of Greece.

Credit institutions are authorised to determine freely the amount of the loans they extend to individuals and legal entities for the financing of fixed assets (prior limit of 70 per cent of the expenditure), provided these loans are not covered by any state guarantee and the interest rate is freely determined.

Direct investments by non-EEC residents can be freely liquidated and repatriated. Previously, a minimum three-year period was required.

September

Government bill on pensions adopted.

The limit on foreign exchange for Greeks travelling to EC countries and Cyprus is raised from ECU 1000 to ECU 1200.

October

The requirement on commercial banks to earmark a percentage of their deposits for the financing of public enterprises and organisations (9 per cent) is reduced, for new deposits, as from 1 November to 6 per cent, as from 1 January 1991 to 3 per cent, and will be abolished as from 1 April 1991. The requirement on the existing stock of deposits will be used only for the financing of public organisations.

The Agricultural Bank of Greece is authorised to underwrite new share or bonds issues, without prior approval by the Bank of Greece.

Investment banks are allowed to accept also time deposits of less than one year maturity, provided that these deposits are related with portfolio management or underwriting undertaken by the banks.

November

Interest rate on 6-month treasury bills is raised from 20.5 to 22 per cent.

December

Interest rate on 2-year government bonds is raised from 24.25 to 24.5 per cent.

The monetary programme for 1991 is adopted: M3 growth target is set at 14-16 per cent, private sector credit expansion at 12.5-13.5 per cent, compared with an estimated inflation of 17 per cent.

1991

January

Four new issues of State bonds with an ECU parity clause open to subscription between 16 and 22 of January.

In order to reduce Olympic Airways huge losses due to the Gulf crisis flight cuts have been decided, overtime work prohibited, rebates on domestic line fares abolished and wage freeze introduced.

Treasury bills of 3, 6 and 12 month maturity issued with interest rates (tax free) of 19 per cent, 22 per cent and 24 per cent respectively.

Due to the credit crunch overnight interbank rates rose to 31 per cent in some sessions.

February

After the presentation by the Greek government of the Medium-term Adjustment Programme, 1991-1993, the EC agreed to provide a loan of ECU 2.2 billion.

The interest rate of 24 month Treasury bills reduced by 0.5 percentage point to 23.5 per cent.

March

Employers and labour unions signed a two-year collective agreement for private sector employees providing for a marked slowdown in wage growth from over 20 per cent in 1990 to around 10 per cent in 1992.

May

Lifting restriction on residents' investments into securities and real estate in EC countries.
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Title Annotation:Greece; Annex III
Publication:OECD Economic Surveys - Greece
Article Type:illustration
Date:Jun 1, 1991
Words:1765
Previous Article:PSBR scenarios.
Next Article:Macroeconomic policies in 1991 and 1992.
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