In a speech at the Economic Club of New York on Wednesday, the Prime Minister of Greece, George Papandreou, said he would “like to dispel some of the peculiar ‘mythology’ around the Greek case,” which, he said, “has been played up by some media commentators and financial analysts.”
Papandreou noted in his prepared remarks that “Six months ago, just before the European Union and IMF agreed to a EUR110 billion loan and support package for Greece, everyone was convinced Greece was doomed to default.” Now, however, he says, “Greece is a different country.”
So different, he stated, that when the largest Greek bank, National Bank, recently sold securities for “recapitalization,” they got a “positive” response. “Norway,” he noted, gave Greek bonds an “important vote of confidence,” adding them to the portfolio of its state pension fund, which was, “the world’s second-biggest sovereign wealth fund.”
He explained that Greece had taken “tough but necessary measures” that had already brought the Greek “deficit down 32%,” with that, Greece was “on track to achieve our target of 40%” reduction of the deficit by year end.
Papandreou remarked that Greece was encouraging reinvestment by businesses by dropping the tax on corporate earnings that were reinvested, as opposed to taken out of the company, to 20% from 24%; they had cut “red tape for business startups,” and had “raised the retirement age to 65,” with no “early retirement before age 60.”
In the Q&A after the speech, Papandreou noted that Greece had tackled its “biggest reforms” in this first, “crucial year,” and that they had “two more years of measures…that Greece has agreed upon with the European Union and IMF.” But he also mentioned that he expected Greece to have “negative 4% growth for this year,” and that “2011 will be a difficult year, as the recession has hit.” Papandreou expects the economy in Greece to improve by 2012.
The Prime Minister added that the people of Greece are “mature” in spite of widely broadcast unrest, and are “making changes that would have been unheard of,” in the past. And he said that in terms of the “misperceptions about Greece and its financial situation,” that the “deficit is not so much financial as it is a deficit of credibility.”
Noting that he is a “sociologist who got a crash course in economics,” Papandreou said he just wanted to be able to “look in the mirror” and know that he was “doing the right thing.” He wants to “make Greece proud of what it is and what its potential is–a great country.”
Read about Greece’s debt sale in July in AdvisorOne.com.