Greek PM announces cabinet restructuring

Listen to this article


Two Greek economists who worked at the Paris-based Organisation for Co-operation and Development will share the task of pulling the country’s faltering economy out of recession.

Greece’s new cabinet under George Papandreou, who was sworn on Tuesday as prime minister, is a mix of foreign-trained experts and Socialist party stalwarts. Mr Papandreou said during the election campaign he wanted to run a “more transparent and efficient” government.

Mr Papandreou will also serve as his own foreign minister – a post he held between 1999 and 2004 – although analysts said he would hand over the job at a later date.

Louka Katseli, a US-trained specialist on emerging economies who headed the OECD’s development group, is to head a new “super-ministry” of economy, competitiveness and shipping – a title that reflects the new Socialist government’s strategy for achieving a turnround in the economy.

A younger colleague, George Papaconstantinou, who worked in the OECD’s science, technology and industry directorate, becomes finance minister with responsibility for preparing the budget and collecting taxes.

He is also expected to represent Greece at the Ecofin group of European Union finance ministers.

While both economists are seasoned members of the Socialist party with close ties to Mr Papandreou, they lack cabinet experience.

Ms Katseli, an MP for Athens, served as economic adviser to the prime minister in the 1990s, while Mr Papaconstantinou, a Euro-deputy, headed a government information society project.

The decision to split the finance ministry into two separate units came as part of a swiftly-executed cabinet restructuring that merged half-a-dozen portfolios and for the first time established a fully-fledged environment ministry.

But former senior finance ministry officials said the new arrangement could make it harder to co-ordinate fiscal and development policy.

“It was hard enough trying to curb spending under one minister. It could be worse with two,” one former official said.

Under the previous conservative government, the budget deficit regularly went over the 3 per cent of gross domestic product limit for eurozone members.

The deficit will reach double digits this year if Ms Katseli implements a plan to borrow an extra €10bn in the fourth quarter to pay off outstanding amounts owed by the government to contractors and medical suppliers.

Greece lags the rest of the eurozone on competitiveness in spite of having achieved growth rates above the EU average for more than a decade.

It dropped four places to 71st out of 133 in the World Economic Forum’s latest global competitiveness rankings published last month.

Shipping is the country’s most competitive sector with Greek owners controlling about 17 per cent of the world fleet – although repatriated income is projected to fall sharply this year because of the global slowdown.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from and redistribute by email or post to the web.