Greece’s prime minister has appealed for national consensus over a controversial plan to raise €50bn from privatisation sales in order to write down part of the country’s large public debt.
“I’m seeking consensus and constructive opposition from other political parties …They have to understand the seriousness of our situation,” said George Papandreou, the Socialist prime minister, addressing a televised cabinet meeting on Sunday.
The scheme triggered a nationalist backlash when it was unveiled last month, with both conservative and leftwing parties accusing the government of yielding to pressure from its creditors to “sell the family silver”.
Greece reaffirmed its commitment to completing the privatisations by 2015 in return for an unexpectedly favourable deal on reducing its debt burden at Friday’s emergency European Union summit.
European leaders approved a three-year extension of Greece’s current bail-out loan to 2021, as well as an interest-rate cut of one percentage point.
Mr Papandreou said the decision would save Athens about €6bn in interest costs on the €80bn loan from its eurozone partners.
The Greek government would also be able to sell its bonds to the European financial stability facility, the EU’s rescue fund for struggling economies, if it was unable to resume borrowing on international markets next year.
The measure would provide Athens with a financial lifeline by allowing Greek debt managers to raise funds at auction at yields well below market rates.
The finance ministry said on Sunday that Greece could raise up to €27bn next year from the EFSF, out of a total annual borrowing requirement of €66bn.
“This is a very positive development, given continuing uncertainty over the government’s chances of returning to markets in 2012,” said Yannis Stournaras, head of the Athens think-tank IOBE.
In return Greece has undertaken to raise €15bn through privatisation sales by the end of 2013 and to complete the programme two years later, as well as to continue to implement fiscal and structural reforms.
The plan provides for selling equity stakes in state utilities and energy operators, to be followed by concessions to operate regional airports and island ports and long leases on state-owned land for tourist development.
If successful, the programme would reduce Greece’s public debt by almost 20 per cent.
“Provided the first stage goes well, markets may be convinced that Greece’s debt burden is sustainable. But the execution risk remains considerable,” said a senior Greek banker.
In response to the furore over the size of the programme, Mr Papandreou pledged that state-owned land would not be sold, but “utilised and developed”. Parliament would have to approve land transfers, he said.
The finance ministry is due to present details of disposals and a specific timetable by the end of this month. It has not yet announced the appointment of advisers to the programme.
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