ESM approves 2 billion euro disbursment to Greece

The European Stability Mechanism’s (ESM) Board of Directors authorized the disbursement of 2 billion euros to Greece, following the country’s completion of the first set of prior actions as demanded by creditors. In the ESM’s announcement it is mentioned that the disbursement will primarily be used for debt service, as well as for the clearance of arrears, along with co-financing projects funded by the EU structural funds.

The director of the ESM Klaus Regling said that “today’s decision of disbursing 2 billion euros from the ESM represents the Greek government’s commitment to the program and to applying a vast list of reforms. This includes reforms of the financial sector which are very important for the recapitalization of the banks. If the program implementation remains strong, then I am confident that the reform efforts of the Greek people will allow them to make visible strides towards a strong recovery”.

However, there is no mention in the ESM’s announcement about the 10 billion euros needed for the recapitalization of the banks, for which the Eurogroup is expected to rule on at a later date.

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Growing the economy without debt: Possibility or wishful thinking?

During the Greek debt crisis, Greek and European politicians have often referred to an “alternative” public policy mix that could enhance growth and reduce debt accumulation. For instance, among many others, Greek Prime Minister Alexis Tsipras in a press conference with German Chancellor Angela Merkel in May 2015 said that “Greece needs a new policy mix.”

Although politicians long ago recognized the need for a different policy mix, it has not been clearly defined and, in turn, has not been implemented. At the same time, many scientific articles propose policy reforms regarding the optimal mix of public expenditures. In particular, recently, it has been proved that an intertemporal change in the allocation of existing government revenues in favor of the more productive sectors can boost growth without the need for more debt, higher taxes or spending cuts. The idea there is simple. The relative productivity of public services among different sectors changes over time. Thus, due to technological progress, some sectors become redundant and some more productive. This generates an opportunity to promote those sectors that are more productive using the current government revenues with mutual benefits to the others.

However, a careful inspection of the data shows that the relative share of government expenditures across sectors changes slightly over time. For example, data from Greek national accounts reveal that the GDP share of public expenses that go toward education is almost constant at 4 percent with small fluctuations. Meanwhile, the productivity of education has increased, for example, due to the introduction of computers and electronic learning. Similarly, the GDP share of public expenses in other sectors of the economy that have become relatively less productive has remained constant. This means that politicians have failed to take into account intertemporal changes in relative productivity.

Yet a reallocation of resources across public sectors may entail substantive social benefits. Consider the following numerical example: Assume that in year A public revenues are 10 euros equally distributed between two sectors, education and health. Further assume that with 5 euros spent on doctors we can cure 10 people and with the remaining 5 euros spent on education we can educate 10 doctors. In this case, the productivity of both sectors is 10/5=2 (with every euro we can cure 2 patients or educate 2 doctors). Let’s assume that in the following year B, due to advancements in technology,1 public revenues increase to 12 euros and productivity in education increases to 3 2 while it remains at 2 in the health sector. If we follow the previous rule for the allocation of resources, with 6 euros spent on doctors we are going to cure 12 people (6*2) and with the remaining 6 euros in education we can educate 18 doctors (6*3). However, if we take into account this change in productivity and, instead of allocating 50 percent of resources to each sector, we give the same amount to doctors as we did in year A, i.e. 5 euros, then we are going to cure 10 people, while with the remaining 7 euros spent on education we can educate 21 (7*3) doctors. In that case, with 21 doctors we could cure 42 people in the following period.

Although this is an artificial and rather simplistic example, it does make a clear point. Relative productivity in economies changes over time. Private markets reallocate resources automatically via price mechanisms, but governments have to explicitly take into account these changes and then deliberately channel public revenues toward the more productive sectors, thus fostering growth. Also, as production increases (e.g. more cured people per doctor), governments will not have to raise public debt in order to finance public expenditures.

This is an illustration of how to increase production in an economy using existing resources and taking into account advances in technology and changes in productivity. But what are the potential problems of changing the policy mix and what are the related solutions? Why do governments not take on board changes in relative productivity when they allocate government spending?

First, in the absence of economic growth, the reallocation of resources generates winners and losers (i.e. through expenditure transfers from the less productive to the more productive sectors). This situation will certainly bring to the surface political obstacles, since the “unproductive” sector will have a clear incentive to resist change. However, this is a short-term problem. As the economy grows, those who lose out from the reforms can be partially compensated from the growth dividend generated by sounder allocation of resources.

Second, opportunistic politicians typically care more about their constituents than maximizing social welfare (e.g. certain professional groups are attached to certain political parties). Indeed, during the last few decades Greece has suffered much from political clientelism and rent-seeking activities. But the good news is that this problem can be resolved if governments allocate public revenues to the productive sectors in the first years of their electoral cycle so as to minimize political costs and/or compensate the unproductive sectors by the end of the political cycle.

Last, we have to note that none of those two problems is likely to arise if the economy is growing because, in that case, the government can intertemporally reallocate only the fraction of revenues that result from higher economic growth (e.g. in the above example, reallocate only the 2 units that come from better technologies).

To sum up, even in the worst-case scenario of no growth and short-run costs in the unproductive sectors, governments can enhance growth and increase overall income by reallocating existing revenues, thus creating aggregate benefits across all sectors of the economy. This new policy mix only requires changes in the composition of current spending, which means that it is tax-neutral and does not add to the accumulation of public debt. Even better, such a policy strategy does not downsize the public sector, which means that is ideologically neutral and therefore can be supported by all political parties irrespective of their ideological predilections. The newly elected Greek government has to grasp the opportunity to proceed with such measures as soon as possible before the next elections for the mutual benefits of all sectors.
1. The change in productivity has its origins in the demographic change we observe in the data. I use here as an example the technological change just for simplification.

2. For example, better technology can imply better laboratories for the education of doctors.

Dr Evangelos Dioikitopoulos is Assistant Professor of Economics at King’s College London.

Also contributed to this report:

Dr Christos Koutsampelas, a Researcher at the University of Cyprus.


source:, Evangelos Dioikitopoulos, 17.11.2015

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Energy Conference in Athens on its role in economic recovery

The important role played by the energy sector in developing the Greek economy will be the main focus of the 20th “Energy and Development” conference which will be held in Athens on November 11-12.

The conference, which is organized by the Institute of Energy for South-East Europe (IENE) at the Eugenides Foundation, will be attended by senior executives, scientists, engineers and energy professionals from all the major Greek energy-related companies and also by policy-makers.

(Source: ANA-MPA)

By Ioanna Zikakou – Oct 22, 2015,


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Science comes before politics

It is high time for scientific voices to claim the space and attention that they deserve. To say the truth loud and clear. To explain the findings of the mineral deposit research, the importance of the productive exploitation of mineral wealth, the operational presence of the mines, the rational management and control of the environmental impact and the added developmental value and sustainability that emerges for Greece.

For citizens to find out what is really going on. To convey to the Greek people the scientific truth through objective information and documented proposals. To regain the lost trust of the citizens and become once again a key point of reference for reliable and authentic information. And maybe these voices will manage at some point to raise awareness and attract the attention of the “hard of hearing” politicians and in general of those in power.

The strategic planning of the utilization of mineral resources and mineral policy can only be dealt with by scientists. Because at the same time that politicians talk about destruction and lives at risk science offers knowledge, technology and quality of life. Because when politicians create unemployment, science creates job opportunities. Because when politicians lead us to social impasses science offers perspective. Because when politicians talk about problems scientists find solutions. After all science leads, guides and must always and largely determine the content of the politics.

So one chooses to revisit on a regular basis the issue of the productive exploitation of the mineral wealth as a credible and viable lifeline for the developmental prospects of the country. Aiming primarily for the citizens to have more comprehensive information and insight into the real data, as well as hoping that the politicians will finally understand what is going on.

It is a fact that Greece has significant growth potential and productive exploitation opportunities with the mineral raw materials available. A typical example are the areas of geological interest in Macedonia and Thrace, where apart from the financial dimension, their strategic national position is also readily understandable. The wealth potential is a given and their industrial exploitation is the only developmental orientation.

Citizens only have to approach the true data with a calm and clear gaze and see the true potential with an open mind. To turn their backs and close their ears to those who methodically cultivate the fear of mines and mineral deposits, and introduce a series of unacceptable conceptual and social divisions. Those who prefer unemployment to work potentials.

Because of course productive mines, collective progress and the common good are strongly against any anti-mining propaganda and effort for developmental depreciation.

SOURCE: 27 /09/2015, by Dr. of Geology Nikolaos Arvanitidis


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Five industry captains call for new policies

The heads of five of the country’s largest industry and manufacturing associations joined in calling for a new industrial policy to return Greece to normality, in a joint article to the ANA-MPA on Sunday.

The article is signed by Hellenic Federation of Enterprises (SEV) President Theodoros Fessas, Federation of Industries of Northern Greece (FING) head Athanassios Savvakis, the Association of Industries in Thessaly and Central Greece (AITCG) President Evripidis Dontas, The Attica-Piraeus Industry Association President Dimitris Mathios and Peloponnese Federation of Industries head Kleomeni Barlou. In it, they outline a common position and the main thrust of a new policy proposed by industry at “the most crucial juncture of the crisis, when our country is faced with two simultaneous and critical challenges.

“On the one hand, the need to urgently implement all the structural reforms and fiscal adjustments of the agreement with the creditors. Secondly, to plan and implement policies that will work as a developmental counterweight, making use of the many opportunities that exist, and restricting the new cycle of recession that lies ahead of us, thus avoiding structural unemployment.”
(source: ana-mpa)

By A. Makris –
Sep 14, 2015/

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Greek government says discussing draft of third bailout deal

Greek government officials discussed a draft of the country’s third bailout agreement drawn up on the basis of discussions with EU/IMF lenders, a government official said on Saturday, boosting hopes a deal could be wrapped up in days.

Athens is racing to wrap up the bailout agreement of as much as 86 billion euros ($94.35 billion) by as early as Tuesday in a bid to get the first disbursement of aid by Aug. 20, when it faces a debt payment to the European Central Bank.

Officials from European Union and International Monetary Fund lenders met Greece’s finance and economy ministers in Athens on Saturday, the day after EU finance officials held a teleconference and noted progress in the talks.

The talks on Saturday focused on the so-called “prior actions” Greece must legislate to qualify for loans, and the two sides reached agreement on the issue, a senior government official said without giving details.

Talks will continue on Sunday to discuss more contentious issues, the official said.

“The agreement will be concluded comfortably before Aug.18,” the official said.

Greece narrowly dodged a euro zone exit last month after months of acrimonious negotiations that culminated with Prime Minister Alexis Tsipras clinching a deal tied to stringent austerity and reform terms to avoid economic collapse.

Since then negotiations on the agreement itself – which will spell out details of the reforms and funds to be disbursed – have proceeded remarkably smoothly, with the lenders praising Greece for its cooperation.

The view of EU officials on Friday’s conference call was that talks are proceeding well and may be completed over the weekend, one source familiar with the matter said.

If a draft memorandum of understanding and an updated debt sustainability analysis are ready as planned on Tuesday, the Greek government and parliament would be expected to approve them by Thursday.

This would open the way for euro zone finance ministers to meet or hold a teleconference on Friday to endorse the up to 86 billion euro three-year loan program for Athens.

Greece would be expected to enact another package of reform legislation before Aug. 20, in parallel with national ratification procedures to receive a first aid payment in time to meet the ECB payment.



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Russia wishes to contribute in the restructuring of the Greek economy by offering facilitations through direct exports of hydrocarbons, oil and natural gas to Greece, stated Energy Minister of Russia Alexander Novak on Sunday.

He said that “the Russian Federation is willing to support in the restoration of the Greek economy via the broadening of the cooperation in the energy sector. For this reason we examine the possibility of organizing direct exports of energy raw materials to Greece in the immediate future”. Novak also clarified that “we are working on it and we believe that we will reach an agreement within the next weeks.”

Source: AMA/MPA

 By  Anastassios Adamopoulos-

– See more at:

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Commenting on his decision to take part in the elections of the Federation of Industries of Northern Greece for the appointment of new management, Mr. Michalis Theodorakopoulos, the CEO of Hellas Gold S.A., which operates as a subsidiary of Eldorado Gold – the company that manages the Cassandra mines in northeastern Halkidiki in Greece – said : “Greece needs sound investments to achieve growth, and in this direction Northern Greece has always been a pioneer”, pointing out that: “We are part of the industry and the industrial history of northern Greece, we are part of Greek entrepreneurship and we invest in: regional development, protection of extroversion, liquidity, Greek trade, national economy and industry and formulation of the necessary conditions so that all the above be supported in practice. With consistency and after so many years of investment in the national economy and development, we will make every effort to contribute to the best possible conditions, aiming at the strengthening of the industry and the private sector, the essential support of the primary sector, the transition away from statism syndromes, bureaucracy and demonization of entrepreneurship, the attraction of new investments and therefore the recovery of the national economy through the path of sound productivity”.

With this statement, Mr. Theodorakopoulos, being for thirty years in the Greek industry, explains his decision to take part in the elections of the Federation of Industries of Northern Greece for the appointment of new management. At the same time, he analyzes the ultimate symbolism of this decision in relation to the place that Hellas Gold holds in Greek investment and industrial environment and the developmental map of Northern Greece. Mr. Michalis Theodorakopoulos, vice president and CEO of Hellas Gold S.A., was elected to the Board of Directors of the Federation of Industries of Northern Greece, in the regular annual general meeting of its members, which was held on Monday, June 22 in Thessaloniki. It should be noted that Mr. Michalis Theodorakopoulos, is a graduate of the National Technical University of Athens as a mining engineer, metallurgist, with experience over 30 years in underground mines, as an engineer responsible for the production, design and development of the worksites, engineering section manager, senior engineer, director of production and director of the Cassandra mines. In January 2015 he was appointed vice president and CEO of Hellas Gold S.A. with direct legal responsibility for the implementation of the investment plan, employing 1,900 workers and investing 400 million dollars with an annual turnover of 100 million dollars, which will increase to 700 million dollars annually after 2017. He has participated in the preparation and supervision of technical and environmental researches in the project of Cassandra mines; he has been a member of the Technical Chamber of Greece since 1987, a member of the Union of Mining and Metallurgical Engineers since 1986 and a member of the Union of Engineers of Greek Industries since 1993.

Meanwhile, Hellas Gold S.A. received the Bronze Award from the Corporate Responsibility Institute (CRI), as a distinction and reward for its activity in Corporate Social Responsibility in the last two years. “This award belongs to 2,000 employees, all residents of Mademohoria, to mining villages and to all Greek engineers that have been active over all these years in this project”, Mr. Theodorakopoulos had stated receiving the award in a splendid ceremony that took place in Goulandris Museum. Specifically, in the context of sustainable and lasting development of the region where the company operates, it promotes social contribution and responsibility actions, as well as employment, which is one of the prime objectives of the company.

EUROECONOMY, 30/06/2015

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