Vox
May 30, 2011
How should Greece try to reduce its debt? Some say Greece should privatise some of its ports and tourist hotspots. While on paper such a move might significantly reduce the debt, this column argues that these calculations rely on some shaky assumptions. Such a sale could make Greece worse off overall.
George Papaconstantinou, Greece's minister of finance, announced on Monday a plan to create a sovereign wealth fund, a sort of Greek “Treuhandanstalt”1 that would implement the ambitious privatisation programme agreed with the EU and the IMF. The plan should raise approximately €50 billion by 2015.
- About €15 billion, within 2013, should come from the concession of the port of Piraeus and the privatisation of a luxury resort on the Athenian coast;
- The remaining €35 billion should come from airports, ports, the sale of the government share of the OTE telephone company (30%), the privatisation of public utilities, tourism, and a restructuring of the state-owned Greek Agricultural Bank (Hope 2011).
This is an ambitious agenda that would reduce Greece's outstanding debt €300 billion by approximately 17%.
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