DOCUMENT OF INERNATIONAL MONEXARY FUND

AND NOT FOR PUBLIC USE

FOR
AGENDA

CCETAIPJS CONFIDEhTIAL
IWGRYffiTICN

To :

Members of
the
Executive
Board

Frcm:

The S e c r e t a r y

Svbj e c t :

Greece

1961 A r t i c l e X I V C o n s d t a t i o n s

Attached f o r c o n s i d e r a t i o n by t h e Executive Directors i s t h e staff

r e p o r t on t h e 1961 A r t i c l e X I V c o n s u l t a t i c n s w i t h Greece. The reccmendations of t h e staff appear on pages 27-29 of Part I. Background i n f o r m t i o n
01;
the econcmy and restrictive system of Greece
i s c o n t a i n e d i n P a r t I1 of
t h e menorandurn.
T h i s s u b J e c t will be placed on a n e a r l y agenda.

n t t : (1)
Other D i s t r i b u t i o n :
Cepar-tment Heads
Uivis ion Chiefs

AND NOT FOR PUBLIC USE

DOCUMENT OF INTERNATIONALMONETARYFUND

GREECX

Staff Renort and Recornendations

Frepared by S t a f f R e p r e s e n b c t i v e s f o r

1961 Consultations

1961 Consultations with Greece

(Reviewed by t h e Committee o n A r t i c l e X I V Consultations )

Approved by I. S. Friedman and Ernest Stllrc

I, I n t r o d u c t i o n

_
I
_

XIV Consulta-

I n accordance with the procedure adopted for the Article

~ l o n s ,a s t a f f m i s s i o n c o n s i s t i n g of NT. E r n e s t S t w c , Mr. F.A.G. Keesing

a,nd I\'lr* Wolfdieter Wabnitz h e l d d i s c u s s i o n s w i t h r e p r e s e n t a t i v e s
of Greece
A -

in Athens from January

27-30, 1962.

The r e p r e s e n t a t i v e s of Greeceincluded:
Bank of Greece: b k . X . Zolotas, Go-Ternor;
J. Pesnazoglou, Deputy
Governor; Mr. -&,K y r k i l i t s i s ,D i r e c t o r
of ResearchDepartment;
A . Sakk e l l a r i o u ,D i r e c t o r ;
N
z
. Kyriazides,
E. Eliades,
D. Ilalkias,
C.
Papachrysanthou, Miss M. Goudi, EIr L,. Papadopoulos, M
r. E. Papadogiorgis ,
Mr. 3. Kalodoukas, ilk. Vlachopapadopoclos , R r . R . E l e f t h e r i a d e s ,
Xanthe.k i s , Miss E. Spentzou.

Mr.

Mr.

MinistryofCoorGination:
Thanos

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Dousis, Mr. Jeronimakis, Mrs. A. Pangalos,

Ministry of Finance: Mr. Trakas, 3 i r e c t o r of t h e Budget.

Ministry of A g r i c u l t w e :

Mr.

1Ii.nistry of E x t e r n a l Affairs:

P'nilippopoulos,Director.

YE. Xydis.

The mission a l s o p a i d v i s i t s t o Mr. Panayotis Papaligouras, Minister

of Coordination, Mr. Spyros Theotokis, Minister of Finance , and P
I&. Panayot i s P i p i n e l l i s , M i n i s t e r of Coumerce.
Mr. Costa F. Caranicas, Alternate Executive Director
attencled the meetings as an observer.

o f t h e Fund,

Pari; I of t h e r e p o r t s m m a r i z e s t h e discussions and contains t h e staff

r e c o m e n d s t i o n s .P a r t
I1 comprisesbackground m t e r i a l .

- 2 -

II

Fund
- i i e i a t i o n s :,.ith Gree,ce
"
"
"
"

PART I:

dev;.logmei.lt vGu1fi be b e t t e r s e r v e d by a c t i o n ciesigiled t o

strengthenthecompetitiveposition
of Greek ex,lortsand
urges the adoption of z p p r o p r i a t e i n t e r n a l c r e d i t a n d p r i c e
poltcymeasures.
Such a c t i o ns h o u i dp e r r a i tr e d w e ?r e l i a n c e
on r e s % r i c t i o n s a n d d i s c r i m i n a t i o n .
" 5.
The Funddoesnot,object
t o the multiple currency
p r a c t i c e c a i n t a i n e d by Greece or1 a temaporery basis b u t u r g e s
i t s earlyelimination.

I nc o n c l u d i n gt h e
1959 c o n s u l t a t i o n s ,t h e Fund h s s no
o t h e r c o m e n t s t o make on t h e transi.Liona1 arrangements Faint a i n e d by Greece."

"6.

111.

Summary ofDiscussions

Since the l a s t A r t i c l e X I V review by Executive Directors

was i n May
1960 and 1961. Views
expressed by t h e staff during the discussions
are g i v e n p r i m a r i l y i n t h e
stzff a p p r a i s a l .

1960, t h ef o l l o w i n gs u m a r i z e sd e v e l o p m e n t si nb o t h

1.

Development in production, employnent, prices and

wages

After a slowing down i n the y e a r s 1958 and 1-95?, Greecehasexperienced

in t h e l a s t two y e a r s a s h a r p u p t u r n i n t h e rate of growth i n t h e g r o s s
I n 1961 thegrossnationalproductroseby
11 percent
nationalproduct.
i n r e a l terms following a r i s e of some 4 percent ir_1960. The i n c r e a s e
i n economic a c t i v i t y i n 1960 was caused primarily by i n c r e a s e d p u b l i c i n frcm i n v i s i b l e s . I n
1961 a l l elements of
vestmentandincreasedearnings
demanci combined t o s p e e d up 'theexpansion.There
was 2 r e c o r d c r o p i r i a l l
branches of agriculture.Publicinvestmentcontinued
t o r i s e . sharply,
reaching some 24 p e rc e n t above t h e 1960 level.Privateinvestment,
especially i n housingandtourism,alsoimcreased.There
was a l s o a r e c3v?ry i n e x p o r t demand, w h i l e t h e i n c r e a s e i n e a r n i n g s f r c m i n v i s i b l e s
continued.
Tile Greek r e p r e s e n t a t i v e s s t a t e d % h a t w e a t h e r c o n d i t i o n s a n d t h e
as olives had an important bearing
biennial production cycle in such fruits
on a g r i c u l t u r a l p r o d u c t i o n which i n 1961 r o s e by 15 p e r c e n t o v e r t h e
1969
l e v e l . They explained, however, t h a t t h e rate ofgrowth wouldhave been
snaller had the pettern and
rnetnod of production i n a g r i c u l t u r e n o t b e e n
a f f e c t e d b y tile G o v e r r m e n t ' s a g r i c u l t u r a l p o l i c y .
The aim of t h i s p o l i c y ,
as e x p l a i n e d i n p r e v i o u s c o n s u l t a t i o n p a p e r s , h a s b e e n t o i n d u c e
farmers
t o shift their I;roductive efforts to labor-intensive production, and
by
i n v c s t n m t i n i r r i g a t i o n p r o j e c t s , machinery and b e t t e r s e e d t o raise prod u c t i v i t yi na g r i c u l t u r e .
Because of t h e Greek s o i l andclimaticconditions,
t h i s p o l i c y e n t a i l e d a s h i f t from production of c e r e a l s t o vegetables and
as cotton and sugar beet, and to animal
fruits, to industrial crops such
husbandry. TheGovernmenz izplementedthispolicybyprovifiicg
farmers
t h r o u g h t h e A g r i c u l t u r a l Bank with long--term investment loans
a t 2 per cent
i s a l s od i r e c t e dt o w a r dt h e
attainmect
i n t e r e s t . The p r i c es u p p o r tp o l i c y
of t h i s end.Moreover,throughbudgetarysubsidies,theGovermentaids

-4-

PART

farmer.; in acquiring machinery and raw m a t e r i a l s , e . g . , c h e m i c a l f e r t i l i z e r s .

The Government a l s o f i m n c e s t h e o r g a n i z a t i o n o f a g r i c u l t u r a l e x t e n s i o n
and marketing services.
The l a r g e i n c r e a s e s i n p r o d u c t i o n i n
1961 over 1960 of tobacco, which
rose by 19 per cent; of cotton,
which rose by 30 p e r c e n t ; a n d o f c i t r u s
fruits, whichinc:reasedby
12 per cent, are to
a substantial degree the
resultsofthispolicy.
The maintenanceofthe
volume ofproduction o f
whetit a t a b o u t t h e l e v e l r e a c h e d i n t h e
l a s t few years also r e f l e c t s t h e
improvement i n p r o d u c t i v i t y a n d s h i f t i n t h e u s e o f l a n d .
Stimulated f i r s t by a sharp increase in public investment and later
by
good c r o p r e s u l t s , as w e l l as by a h i g h e r v o l m e o private investments,
i n d u s t r i a l p r o d u c t i o n i n 1961 rose by some 6 per cent over the average
r e a c h e d i n 1960. The l a r g e s t i n c r e a s e s were r e g i s t e r e d i n b u i l d i n g m a t e r i a l s ,
machineryand e l e c t r i c a l a p p l i a n c e s .
The t e x t i l e i n d u s t r y a l s o shcwed an
i n c r e a s e of some 9 p e r c e n t , as a g a i n s t 14 F e r c e n t i n
1960. ( E e t a i l s on
industrial production are given in
Part 11, p . 7, Table 5. )
The Greek r e p r e s e n t a t i v e s s t a t e d t h a t t h e i n c r e a s e i n i n d u s t r i a l
pr-).
duction and a sharp rise i n t h e s e r v i c e t r a d e h e l p e d i n
1960, andeven mol-?
i n 1961, t o e a s e t h e
unemployment problem. The unemplomentsituation has
beenimproved a l s o b y a s u b s t a n t i a l l y l a r g e r e m i g r a t i o n .
I n >..961.,
58,&0
personsemigrated, compared with 47, e00 i n 1960 and 23,700 i n 1959. %e
annualincrement t o t h e l a b o r f o r c e
i s estimated to be around
55,OCO perc.ona
a y e a r . Hence, a l a r g e r p r o p o r t i o n o f workers drawn i n t o i n d u s t r y a n d
services during 1960 and 1961 was r e c r u i t e d from the ranks of the une~pl-oyod
andunderemployed, e s p e c i a l l y i n a g r i c u l t u r e .
I n t h e l a s t two y e a r s , i n a d d i t i o n t o c o n t i n u e d e m i g r a t i o n o v e r s e a s ,
a
s u b s t a n t i a l number of Greekworkershavefound
employment i n t h e F e d e r a l
Republicof Germany. More recently,negotiationshavebeenconcludedfor
Greek l z b o r t o be employed also in Austria. There
has also been a s i z a b l e
i m i g r a t i o n i n t o Greece of Greek n a t i o n a l s p r e v i o u s l y r e s i d e n t i n t h e
Urn.
Despite a f u r t h e r s u b s t a n t i a l r i s e i n
t h e money s u p p l y , p r i c e s t a b i l t t y
was more or less maintained. Wholesale prices rose by
2.3 F e r c e n t i n 2-36"
and a f u r t h e r 1.5 p e r c e n t i n 1561. While r e t a i l f o o d p r i c e s i n t h e two
f i n a l months of 1960 rose sharply because of t h e s h o r t a g e of o l i v e o i l , t h e y
declined during 1961. Consumer p r i c e s a t theend of 1961 were s l i g h t l y
lower than at t h e end of 1960.
While l a b o r i s organized in Greece,
the e x i s t e n c e o f large groups o f
unemployed and underemployed has a r e s t r a i n i n g i n f l u e m e on any militant.
actionbytradeunions.
The f a c t t h a t most businessandmanufacturingenterp r i s e s a r e small o r medium s i z e d f a m i l y v e n t u r e s may a l s o r e s t r a i n a g g r e s s i v e
wage demands: i n 1958 l e s s t h a n 1 p e r c e n t of t h e m m u f a c t u r i n g e n t e r p r i s e s
enplnyed more than 50 persons.Despitethesefacts,
wa,ges and s a l a r i e s I-iL-:e
r i s e n i n t h e last two yearsbyabout
4 to 5 per cent annually.
The Grt.e;-.
r e p r e s e n t a t i v e s f e l t t h a t such a r i s e was considered as coupatible vitl, : - h e
maintena.nceofinternalpricestability.

PART 7:

- 5 The GJ7JermTii3r.J i s c;?m111..-~:.r3d.t o m a i n h i n rtinirrw-incomes

for farmyx,
small. I t endeavors t o dibcharge
p a r t i c u i z r l y 'Decmsefsrmholdingsarevery
+.his commitment t h r o u g h p o l i c i e s d e s i g n e d t o i n c r e a s e t h e p r o d u c t i v i t y
of
a g r i c u l t u r e , as mentioned above; by n?aint.a:ning e, s a l e s monopoly f o r c e r t a i n
products bought by the
farmers and s e l l i n g thembelow cost; by paying subsid i e s t o p r o d u c e r s of c e r t a i n p r o d u c t s on basis of acreage under cuitivation;
a ~ bdy l n a i n t s i n i n g f l o o r p r i c e s f o r a g r i c u l t u r a l p r o d u c t s
at l e v e l s a s s u r i n g
a t o l e r a b l e income t o t h e small farmers. F l o o rp r i c e sa r e
most i m p o r t a n tf o r
wheat,oliveoil,sultanas
and c u r r a n t s , b u t a l s o a p p l y t o some o t h e r p r o d u c t s .
The f l o o r p r i c e f o r wheat has been consistently
above t h e l e v e l of world
marketprices;supportpricesforotherproducts
have a t timesbeenaboveand
a t othertime a t , t h e l e v e l of worldmarketprices.
If t h e r e i s a t h r e a t t h a t
p r i c e s might f a l l b e l o w t h e f l o o r l e v e l , t h e
Government i n t e r v e n e s as an
active buyer in the market.
A s a r e s u l t of t h e s e p o l i c i e s , md of anupsurge
i n e x t e r n a l demand f o r c e r t a i n Greek prochcts, e.g., tobacco, the Index
of
pricesreceivedbyfaraersin
1961 roseby scme 5.7 per cent above p r i c e s r e c e i v e d i n 1960, w h i l e p r i c e s of i n d u s t r i a l commoditiesboughtbyfarmersin1 percent.
Hence, t h e r e a l income o f thefarmers was
c r e a s e db yl e s st h a n
augmented i n 1961 not only by
good c r o p r e s u l t s , b u t a l s o b y f a v o r a b l e p r i c e
developments.
The Greek r e p r e s e n t a t i v e s e x p r e s s e d t h e b e l i e f t h a t t h e f a v o r a b l e o u t c c a e
i n farm income, t h e l a r g e r e a r n i n g s from abroad, and the planned large
public
arid private investment, should ensure in
1962 a f u r t h e r s u b s t a n t i a l growth
i n t h eg r o s sn a t i o n a lp r o d u c t .
They f e l t , however, t h a t no firm f o r e c a s t i s
p o s s i b l e as t h e outcome i s t o o much dependent on a g r i c u l t u r e .
2.

Iaplementation of the development plan

1960-1964
-

In 1959, as d i s c u s s e d i n t h e
l a s t c o n s u l t a t i o n s r e p o r t (SM/60/32), t h e
Government adopted a Five YearDevelopment Plan, 50 begin i n 1960, which
was designed to achieve an accelerated growth in the national
income and
a r e d u c t i o n i n s t r u c t u r a l unemploymen-t.
O-ne of t h e t a r g e t s of t h e program i s anaverageannual
rate ofgrowth
ofsoae 6 p e r c e n t i n t h e g r o s s n a t i o n a l p r o d u c t . A c c o r d i n g t o t h e p l a n ,
the achievement of this rate of expansion
w i l l require investments in the
public and p r i v a t e s e c t o r t o t a l i n g $3.7 b i l l i o n , s p r e a d o v e r
a f-ive year
period.This
i s some 20 p e rc e n t more thanthevalueofthegrossneticna?.
proCuct i n 1959. About two t h i r d s of a l l investmentsaretobeundertaken
i n t h e p r i v a t e s e c t o r and one t h i r d i n t h e p u b l i c s e c t o r o f t h e
economy.
The Greek r e p r e s e n t a t i v e s e x p r e s s e d s a t i s f a c t i o n
a t t h e manner i n which
the plan has been implemented thus far.
It was , and c o n t i n u e s t o be, t h e
basic strategy of the plan to rely
on p r i v a t e e n t r e p r e n e u r i a l i n i t i a t i v e as
. f a r as investment i n a g r i c u l t u r e , i n d u s t r y , t r a d e a n d s e r v i c e s
i s concerned.
The Government i s t o c o n c e n t r a t e i t s e f f o r t p r i m a r i l y on i n f r a s t r u c t u r e , a c ?
t o undertak.e responsibility for direct investment in industry
or trzde only
if the private sector
i s n o t w i l l i n g t o assume t h i s r e s p o n s i b i l i t y d e s p i t e
variousinducements i n t h e c r e d i t , f i s c a l
and f o r e i g n exchange spheres. I n
f a c t , Government i n t e r v e n t i o n was n e c e s s a r y t o e s t a b l i s h t h e n i t r o g e n f a c t o r y ,
o i l r e f i n e r y . However, e v e ni nr e g a r dt ot h e s e
t h es u g a rr e f i n e r i e sa n dt h e
enterprises,theintentionofthe
Government, a c c o r d i n g t o t h e Greek repres e n t a t i v e s , i s t o s e l l them t o t h e p r i v a t e s e c t o r whenever a s u i t a b l e o p p ~ r tunityarises.
Hence, t h e p r e s e n t heavy p a r t i c i p a t i o n b y t h e
Government i n
To t h e e x t e n t t h a t t h e s e
th.eseprojects shasuld b ec o n s i d e r e dt r a n s i t i o n s l .
yroj!:.-ts ~ 5 1 1 .
e f f r c ! t i v e l y EZE?: into pri.rate hacds, tLe ca.pit?-i invest,ed by
t h e Scverrzent \?!.X. becoae a v s i l a b l e for. now prcjecis r,-.quiring Government
spomcl-ship.

- 6 -

PART I

I n 1960 and 1961, a c t u a l i n v e s t m e n t e x p e n d i t u r e s , b o t h p r i v a t e a n d

p u b l i c ,f a i l e dt or e a c ht h ep l a n n e dt o t a l .
Hence, i f t h e p l a n n e d t a r g e t s
& r e t o be reached i n t h e n e x t t h r e e y e w s , p r i v a t e
investmep.t t r i l l have t o
be .increased by
39 per cent and public investment by
12 Fer cent 3ver the
f i g u r e so r i g i n a l l yp r o j e c t e d .
The Greek r e p r e s e n t a t i v e s f e l t t h a t s u c h
increases in investment could be attained without endzngering interim1
is sufficiently flexible to allow a
stability, they indicated that-the plan
reduction in Investment expenbture should such
8 threat ileverzheless appear.
The Greek r e p r e s e n t a t i v e s s t a t e d t h a t t o some e x t e n t t h e l a g i n p r i v a t e
that
investment i n t h e f i r s t two years of t h e p l a n was c a u s e d b y t h e f a c t
for many investments t h i s was t h e p e r i o d of preparation. A much s t e e p e r
r a t e of growth i n p r i v a t e i n v e s t m e n t s h o u l d be expected toward the end
of
the FiveYeaPlan,
when p r o j e c t s w i l l beixplemented.This
holds t r u e
especially for larg,er investment projects.
Despite the fa.ct t h a t private sector investments have thus lagged cona l a r g e s h a r e of private investment
sider8bl.y behind the plan and that
c o n s i s t e d of less directly productive ventures, e.g., housing construction,
t h e Greek r e p r e s e n t a t i v e s s t a t e d t h a t t h e i r GoverLment i s s a t i s f i e d w i t h
t h e p o l i c y it now pursues i n t h i s s p h e r e , a n d t h a t t h e p o l i c y l n s t r u m e n t s
the desired sectors of
t h e economy
useZ.:-to c h a n n e l p r i v a t e i n v e s t m e n t i n t o
haveworkedreasonablywell.
The p o l i c y c o n s i s t s Gf s p e c i a l f i s c a l m e a s u r e s
p r o v i d i n gf o ra c c e k r a t e dd e p r e c i a t i o n
of e f f e c t e di n v e s t m e n t s ;c e r t a i n
area
income tax concessions i f p r o j e c t s a r e l o c a t e d i n t h e g e o g r a p h i c
favoredbytheplan;long-termcreditfacilities
at p r e f e r e n t i a l r a t e s
of i n t e r e s t ; c a p i t a l p a r t i c i p a t i o n b y t h e
Government-owned I n d u s t r i a l
Fzrt 11, p. 11). I na d d i t i o n ,a g r i c u l Development C o r p o r a t i o n ,e t c .( s e e
t u r a l investEent, as mentioned in
t h e previous section, i s influenced by
long-termloans frcm t h e A g r i c u l t u r a l Bank. The Government i s a l s o i n f l u e n c i n g p r i v a t e developmentinvestmentthrough
p r i c e a n d comrnercial
policy and the timing and location
of;' i t s own i n f r a s t r u c t u r e i n v e s t m e n t s .
The Greek r e p r e s e n t a t i v e s p o i n t e d o u t t h a t i n v e s t m e n t s i n t h e t o u r i s t
t r a d e , made l a r g e l y b y p r i v a t e e n t e r p r i s e ,
are a n exampleofwhatcan
be
achieved by a purpcseful harmonization of government investment i n i n f r a structure and fisca.1 and credit inducements to private entrepreneurs to
e f f e c t t h e d e s i r e d volume andcomposition of investment. In 1961, some
5OO,OOO t o u r i s t s v i s i t e d t h e c o u n t r y
as a g a i n s t 160,000 i n 1954.

The Greek r e p r e s e n t a t i v e s s t a t e d t h a t o t h e r
examples of %he success
are the expansion of
t h u s far achieved with the policies enumerated above
theshipyardsandtheestablishment
of an aluminum industry. Both t h e s e
developments are expected t o induce t h e establishment of complementary i n dustries in the country.

A s a r e s u l t of the investment provided for

i n t h e developmentplan, it
i s expected that during the planned period
some 384,000 new employment
A
t t h e s t a r t of
o p p o r t u n i t i e s will be c r e a t e d i n i n d u s t r y a n d s e r v i c e s .
a t the end of 1959), t h e employable 1&or f o r c e was estimr,+,ed
the plan (i.e.,
a t 3.4 million people.
Open andhiddenunenployment
was estimated at; 700, CCD
arld the annual increment to
t h e l a b o r f o r c e a t 55,000, of whom 15,000 were
expected t o emigrate. A s s t a t e d i n t h e e a r l i e r s e c t o r
of this r e p o r t ,
emigration i n t h e f i r s t two y e w s Gf the plan, absorbed Eearly the whde

PART I

e d L i t i o nt ot h el a b o rf o r c e .
A s a r e s u l t ,t h ee x e c u t i o n
of t h e f i v e yeaidevslopmentplar- vi11 make e greater c o n t r i b u t i o n t o t h e s o l u t i o n o f
-the
u:-iexr;plojrmentprob!.ex
t h a n h a d b e e n e n t i c i p a t e d when t h e p l a n was dratm up.
IIowe-ver, even i f t h e p r e s e n t r a t e of e z i g r a t i o n s h o u l d c o n t i x e , t h e
solut i o n of tile unemployment problem w i l l r e q u j r e g r e a t e f f o r f , f o r n a n y y e a r s
t o cor.1e.

Tne Greek r e p r e s e n t a t i v e s r e f e r r e d t o a n i m p o r t a n t a c h i e v e m e n t i n t h e
l a s t thyee years involving ocean-going shipping,
T;iz., Yne S0vernn:en-t' s
substantialsuccessininducingthetransfer
of Greek-owned s h i p s t o t h e
Greek f l a g t h r o u g h a p p r o p r i a t e tax and foreign excnangemeasures ( f o r
d e t a i l s , see ? a r t 11, p. 7 ). I n t h e last two years,thetonnage
of s h i p s
under t h e Greek f l a g h a s r i s e n from 3.4 m i l l i o n t o n s t o 6.4 n i l l i o n 'cons.
" u i n g -;hesame
p e r i o d , f o r e i g n excl-mlge earnings from transportation have
r i s e n f - o m $60.3 m i l l i o n i n 1959 t o $102 m i l l i o n i n 1961. The Greek r e present2,5ives f e l t t h a t t h e s e r e s u l t s c o u l d
n o t have been achieved without
t:he r e s t o r a t i o n of i n t e r n a lm o n e t a r ys t a b i l i t y .
They stated, however, t h a t
tile boycott by the International Transport Zorkers' Federation of
ships flying
flags of convenience has also played
a part.
The Greek r e p r e s e n t a t i v e s a g r e e d t h a t t o s u c c e e d i n t h e i r 6 e v e l o p e c - t
policy, t h e Government will have t o make f m t h e r s u b s t a n t i a l i n v e s t m e n t
i n t h e t e c h n i c a l e d u c a t i o n of farm workers as w e l l as o f t h e i n a u s t r i a l
&.bm f o r c e . They f e l t s - i r o n g l y ,m o r e o v e r ,t h a ti n t e r n a lp r i c es t a b i l i t y
must be preserved through appropriate fiscal and monetary
measures, as only
-thus c o u l d t h e hope b e e n t e r t a i n e d t h a t domesticsaving w i l l r i s e i n t h e
Yeriod ahzad and, without an increased
volume of s a v i o g s , t h e o v e r - a l l
o b j e c t i v e of theplar, coulfi not be accozplished. It must be expected, i n
L,Lr view, t h a t w i t h a n i n c r e a s e d l e v e l
of a c t i v i t y , e f f e c t i v e demand for
consumption b r i l l r i s e s u b s t a n t i a l l y . They t h e r e f o r ee n p h a s i z e dt h a t ,i n
order t o m e i n t a i n i n t e r n e l p i c e s t a b i l i t y , more a t t e n t i o n t h a n h i t h e r t o
r , ; i l l have t o be riel-oteil t o i n v e s t n e n t c a p a b l e
of c o n t r i b u t i n g t o a n e z r l y
increase in production.
"-,

The a s s o c i a t i o n of Greece w i t h t h e &ropean Scononic Comunity also

r e q u i r e s a readjustmentininvestmentpoiicy.
(Details on t h ea s s o c l a t i o n
are g i v e n i n P a r t
11, p. 54. ) The Greek r e p r e s e n t a t i v e se x p r e s s e dt h e
view-chat i n d u s t r i a l i n v e s t m e n t whici1 could prosper only behind hee;vy
to
customs b a r r i e r s s h o u l d b e d i s c o u r a g e d , v h i l e p r i o r i k y s h o - ~ ~ l d b e g i - r e n
the production ofcommoditieswhichcouldmeet,
i n t e r m of c o s t s sild
cluaiixy, i n t e r n a t i o n a lc o m p e t i t i v ec o n d i t i o n s .
The l o n gt r a n s i t i o n a l
p e r i c d -&icnGreece obtained from the Zuropean
Economic C o m u n i t y i n order
t o c a r r y o u t the necessary econonic adaptation and thus avoid unnecessary
s o c i a l d i s t u r b a n c e s w i l l not be used t o p r e s e r v e t h e p r i v i l e g e d p o s i t i o n
presen'clyenjoyed by soce i n d u s t r i e s . I t i s r e a l i z e d t l a t t o make Greek
agriculture,industryandhandicraftfullyCompetitive,
Greek producers
vi11 have t o s p e c i a l i z e i n c e r t a i n l i n e s
of production and thereby reduce
d e i r u n i tc o s t s .
To a c h i e v et h i sg o a l ,t h e
Goverrment i s t a k i n g s t e p s t o
They f e l t , however, t h a t the t r a n s i t i o n
encourageeppropriateinvestnent.
t o nodern methods of production would be speeded up if Greek producers
could benefit from the
"know-how" developed elsewhere by cooperating
in
_cro&xtion i r i t hf o r e i g ne n t e r p r i s e s .
To a c h i e v et h i s ,t h e
Government i s
endeavoring to attract the interest
of foreig1-i enterprises and foreign capita.1.
A'

-a-

PART I

The Greek r e p r e s e n t a t i v e s s t a t z d t h a t ,
on t h e b a s i s of t h e l a t e s t
calculations,theforeign
exchange contentoftheinvest.rnentoftheFive
Year P l a n will amount t o a b o u t $800 m i l l i o n . A t t h e t i n e of t h e s t a f f
d i s c u s s i o n s i n Athens,the Government was r e a s o n a b l y c e r t a i n of securing
a b o u th a l ft h i sa m o w t .
The Govesrment hopes t h a t 8 part of t h e r e s t
w i l l be secured thrmgh increased private capital inflow,
wnich it i s
hoped w i l l be stimulated by
the Greek a s s o c i a t i o n w i t h t h e EEC. The
will be
a u t h o r i t i e s a l s o hope t h e t i n t h e e x e c u t i o n of t h e i r p l a n , t h e y
a s s i s t e d also by o t h e r members ofthe CECD. They e q e c t t h a t t h e r e p o r t
of a ccrmittee of t h r e e men of high personal standing, eppolnted by the
MTO Council t o i n q u i r e i n t o t h e p o s s i b l e a s s i s t a r , c e
t o GreeceandTurkey
w i l l suggest trays and means t o essist them i n t h e i r development e f f o r t .
The Greek r e p r e s e n t a t i v e s e x p l a l n e d t h a t t h e r e
are now a d e q w t e
laws t o promote aninflow of f o r e i g n p r i v a t e c a p i t a l .
However, t h e
A g r e a t many
r e s u l t s t h u s f a r achieved a r e n o t v e r y s a t i s f a c t o r y .
i n q u i r i e s h m e been received, but
manyof
them were p r o p o s e l s t o e s t a b l i s h
production of goods f o r i n t e r n a l consumptiononly,2ndoften
in competition
w i t h e x i s t i n g firms. 'yjihile the increasedproduction of goods d e s t i n e d
f o r i n t e r n a l c o n s m . . p t i o n o n l y would no doubt be h e l p f u l t o t h e maintenance
c,f i n t e r n a l p r i c e s t a b i l i t y ,
it might, i n t h e i r view, a t the same time
l e a d t o harshsocialconsequences
(e.&., c l o s i n g of e x i s t i n g p l a n t s , e t c . )
which a n underemployed economy could ill afford. Hence, proposals which
goods h i t h e r t o l a r g e l y i m p o r t e d ,
d i d not o f f e r an expamion of production of
or the production of commoditieswhichcould be s o l d on f o r e i g n as w e l l
as domestic markets,, were often
resisted by various i n t e r e s t e d p a r t i e s
with much publicsupport.Th2sdelayed
e i r adoption,even
i f t h ea u t n o r i t i e s agreed with the proposed projects.

3.

Mcnetary p o l i c y

I n the course of t h e l a s t two years, monetary policy has twice been

change2 i n o r d e r to h e l p s u s t a i n a d e s i r a b l e r a t e of e c a x m i c g r o z t h
underccnditions of s t a b i l i t y . To a c c e l e r a t e economic a c t i v i t y a f t e r a
s1ovdo-m i n production which o c c u r r e d i n 1959 and 1959, t h e a u t h o r i t i e s
s t a r t e d i n l a t e 1959 a n e a s y c r e d i t p o l i c y
which vas continued throughoEt 1960.
In 1961, howevzr, the monetary authorities found
it n e c e s s a r y t o r e s t r z i n
creditexpansion.
A s a r e s u l t of t h e s e p o l i c i e s t h e money supply, which
i n c r e a s e d b y 9 p e r c e n t i n 1959, rose by 19 per cent i n 1960 and by 15 p e r
exc e n t i n 1961. A detailed d e s c r i p t i o n of t h e f a c t o r s c a u s i n g t h e l a r g e
p a n s i o n i n t h e money supply and the development i n c r e d i t i n 1960 end 1961
is g i v e n i n P a r t II, pp. 15-25, Tables 3.-16.

f
l U n t i l now, t h e l a r g e s t p a r t o f t h e i n f l o w o f f o r e i g n p r i v a t e c a p i t a l
came t o t h e country-w i t h o u t r e q u e s t i n g t h e g u a r a n t e e s p r o v i d e d by t h e
These are mcstly
e x i s t i n g laws concerningforeignprivateinvestments.
funds owned by persons of
Greek descent who a r e l i v i n g o r have lived zbroad
andintendtoinvest
some o f t h e i r f u n d s i n t h e i r n a t i v e l a n d .
Many of t h e
small but very significant and effective investments in the
rural areas i n
t o some s o u r c e s , t h i s t y p of c a p i t a l
Greece were thnus finenced.According
i s a l s o resFoz..siible f o r a. s u b s t a n t i a l :!art of t h e r e c e n t h o u s i n g 'boom i.n
I;-thens.

FART I

A s a r e s u l t o f '&he e a s y c r e d i t p o l i c y i n
1960, lending increa.sed t c
an e x t e n t t h a t t i l e commercialbanks'had
t o d r a w down t h e i r c a s h b a l a n c e s
h e l dw i t ht h e
Bank of Greece. I n a d d i t i o n , t h e l a r g e i n c r e a s e i n c r e d i t
was aided by a s a b s t a n t i a l c r e d i t e x p a n s i o n of t h e Bank of Greece i t s e l f :
c r e d i t t o nongovermnental borrowers increased by
C r 1,OeJ m i l l i o n , o r by
s m e 1-3 percer-t.
The Greek r 2 p r e s e n t a t i v e s e x p l a i n e d t h a t t h e i n c r e a s e i n c r e d i t t o
t h e nongovernment s e c t o r i n 1960, amounting t o 17 per cent over
1959, was
f a c i l i t a t e d by v a r i o u s d e c i s i o n s of the Currency Committeewhich encouraged
t h e banks t o e x t e n d c r e d i t t o indus",y and trade by l i f t i n g v a r i o u s d e t a i l e d
qu.antitativecontrolsovercredits
'LO d i f i e r e n t i n d u s t r i e s a n d t r a d e .
Moreover, short- and long-term credits
i n s u b s t a n t i a l amounts were given by
t h e 4 g r i c u l t w a l Bank from Bankof Greecefunds t o a g r i c u l t u r e a n d handilcraft.This
WES i n l i n e w i t h t h e
Gover-ment' s p o l i c y t o h e l p t o expand
handicraft production and to facPlitate the diversification of, and
improve:nent i n ,a g r i c u l t u r a lp r o d u c t i o n .
The Greek r e p r e s e n t a t i v e sa g r e e d .t h a t
t h e r e was evidence that some c r e d i t e x t e n d e d t o h a n d i c r a f t s a n d t o a g r i c u l t u r e
;ras used t o f i n a n c e consumption. C r e d i t t o i n d u s t r y a n d c o m e r c e
seemed
a l s o t o ha-re b e e n d i v e r t e d t o t h e f i n a n c i n g
of inpor'ts and of housing
cons.i;ructi_on.

J-s economic a c t i v i t y e n t e r e d i n t o a phase of more vigorous expansion

I n t h e l a t t e r h a l f of 1960, a n d e s p e c i a l l y i n t h e c o u r s e
of 1961, t h e
.-,onetary a u t h o r i t i e s t o o k se?Teral s t e p s t o r z s - l r a i n t h e vo1urr.e of c r e d i t ,
t o encourage savings deposits, and to divert deposits into the financing
o f agriculture; thereby they helped to re&uce the reliance
of t h e A g r i c u l t u r a l Bani< on B a n k ofGrzecefunds.
h o n g t h e s e s t e p s was t h e d e c i s i o n
of theCurrency Co;nmi%tee of blarch 1, 1961, t o i n c r e a s e from 10 t o 18 t h e
Ferceniage of t o t a l s i g h t a n d s a v i n g s d e p o s i t s
which comnercialSanks must
hold in Treasury bills;
by t h i s ineasure t h e monetary a u t h o r i t i e s p r e v e n t e d
t h e bar&s from s e l l i n g T r e a s u r y b i l l s from t h e i r p o r t f o l i o s 50 t h e C e n t r a l
a slowdown
Bank, an expedient which t h e i n t e n s i v e denand f o r c r e d i t a n d
In the forma-tion of d e p o s i t s nade tempting. ( I n 1960, b u t e s p e c i a l l y i n
1953, the banks had bought h r g e r volumes of T r e a s u r y b i l l s t h a n t h e
r e g u l a t i o n s r e q u i r e d of them. )
I n October 1961, t h e a u t h o r i t i e s d e c i d e d t o r a i s e i n t e r e s t r a t e s
on
time deposits from 5.5 t o 6.5 p e r c e n t , a n d e s t a b l i s h e d
a new category of
deposits subject to three
months' n o t i c e b e a r i n g i n t e r e s t a t 5.5 p e r c e n t .
3 0 t ht h e s e measures were d e s i g n e dt os t i m u l a t ep e r s o n a ls a v i n g s .I no r d e r
of t h e A g r i c u l t u r a l Bank on C e n t r a l Bank funds, the
t o reduce the reliacce
i n t e r e s t r a t e s on time d e p o s i t s p a i d by t h e A g r i c u l t u r a l Bank were r a i s e d
by 1/4 per cent above t h e rates p a i d f o r similar d e p o s i t s by other banks.
The Currency Committee has recommended t o t h e banks t o b e s e l e c t i v e i n t h e i r
A
t t h e same time,
c r e d i t to i n d u s t r y a n d t o favor procluctiveinves-tment.
I
t Lnsiructed them t o i n s e r t i n t h e i r c r e d i t c o n t r a c t s
a penalty clause
for other purposes than those
p r o v i d i n g t h a t i f borrowed funds are used
f o r which t h e l o a n was granted, 10 per cent of t h e l o a n w i l l be f o r f e i t e d
as a p e n a l t y t o t h e s t a t e .

The e a r l i e r d e c i s i o n o f t h e n o n e t a r y a u t h o r i t l e s , a c c o r d i n g t o
>?hick
the comnercial banks must devote 15 per cent of t h e i r d e p o s i t s t o the
granting of medium- a n d l o n g - t e r m l o a n s t o i n d u s t r i e s
and agriculsw-e,
c o n t i n c e d t o be i n e f f e c t .
Despite these measures,
a t t h e e n d of 1961 money supply was, as no-tied
above, some 15 p e r c e n t l a r g e r t h a n
a t theend of 1960. The Greek r e p r e s e n t a t i v e s m a i n t a i n e d t h a t i f need be the
tools dzscribed above wou.ld be
adequateforrestrainingmonetaryexpansion.
They have n o t r e s t r a i n e d
c r e d i t s mwe because it has been f e l t t h a t t h e p e r m i t t e d volume of c r e 3 i t
was n o t a f f e c t i n g p r i c e s t a b i l i t y .
The bestconfirmation of t h i s f a c t i s
the continued sale o f g o l d c o i n s b y t h e p u b ] - i c t o t h e C e n t r a l
Bark. I n
t h e i r view, no convincingcasecan
be made t h a t t h e l a r g e c r e d i t e x p a n s i o n
was d i r e c t l y r e s p o n s i b l e f o r t h e s u b s t a n t i a l i n c r e a s e i n i m p o r t s
i n the
l a s t tvo years. Ratner, t h e y f e l t t h a t t h e i n c r e a s e d vol.une of money was
r e q x i r e d i n p a r t t o meet t h e n e e d f o r money caused by the absorption
of
theruralsectorintothemarket
economy. They p o i n t e 6 o u t t h a t
as a r e s u l t
of t h e c o n t i n u e d s u b s t a n t i a l i n v e s t m e n t i n a g r i c u l t u r e a n d o t h e r a g r i c u I t . ! I r z l
p o l i c i e s , t h e s u b s i s t e n c e s e c t o r of t h e economy has been rapidly shrinking.
They a l s o s t a t e d t h a t growingconfidence i n t h e s t a b i l i t y of t h e c u r rency and the banking system increased the role
of t h e banks as a d v i s o r s
i nc o r m e r c i a i and investmentmatters.
One of theconseqdences of t h i s
of trade trF-nsactions
developent i s an increasing shift in the financing
from nozbank t o bark channels, by replacing
numerous, o f t e n very large,
private credit operations connected
wi5h t r a d e b y b a n k i n g t r m s a c t i o n s
which s t a t i s t i c s on c r e d i t , quasi-moneyand moneynow r e g i s 5 e r f o r t h e f i r s t
time

T9e denonetization of gold coins has also increased the

demsnr', for
money. I n t h e l a s t two years,the use of goldcoins a s means of p q p l e n t
has been further reduced.

The Greek r e p r e s e n t a t i v e s a g r e e 4 t h a t t h e s e f a c t o r s
w i l l at a certain
point cease t o o p e r a t e , a n d t h a t t h e r e f o r e t h e m o n e t a r y a u t h o r i t i e s
will
have t o f o l l o w . . t h e s i t u a t i o n v e r y c l o s e l y a n d be prepared t o imposesuch
measures as w i l l e f f e c t i v e l y limit f u r t h e r e x p a n s i o n i n t h e xoney supply.
It i s w i t h t h i s i n mind t h a t t h e monetary a u t h o r i t i e s have taken, i n t h e
last two years, several s t e p s y h i c h w i l l s t r e n g t h e n t h e i r ability t o take
e f f e c t i v e measures t o h a l t , when need be, a n u n d e s i r a b l e e x s m s i o n of c r e d i t .
In this context,they mentioned the various efforts
made t o i n c r e a s e t h e
a b i l i t y of t h e 4 - g r i c u l t u r a l Bank t o s e c u r e r e s o u r c e s f o r i t s lending operat i o n s from non-Cen:;ral Bank so11z-ces ( s e e P a r t 11, p. 24). TheEank of
Greece, t h e y p o i n t e d out, is corrmitted t o p r o v i d e t h e A g r i c u l t v s a l Bank
wi.tk: f u n d s n e c e s s a r y t o meet c e r t a i n s h o r t - t e r m c u l t i v a t i o n c r e d i t
requirements of t h e farmers, as w e l l as t o ensure t h e f l o w of t h e a p p r o p r i a t e volume
of l o n g - t e r nc r e d i ti n t oa g r i c u l t u r a li n v e s t m e n t .T h i sr e d u c e s
its freedoa
of action, should a h a l t i n credit expansion be necessary. To stx-engthen t h e
freedomof a c t i o n of t h e C e n t r a l Fank, t h e monetary a u t h o r i t i e s have d i r e c t e d
publ.ic corporations t o ir;vest pcrt of t h e i r fullds t 5 r o u g h t h e A g r i c x l t u r z l
2d-l?k.

11 ?m'T I
collected w i l l bc direcxed into i'innncing of investrrents of' h a n d i c r a f t s
and tadxs-bry, a t a p r e f z r c n t i 3 1 rate ol i n t e r e s t . The I;6v~errxnnnti 5 ccnz i t t z d . t o such lmcling policy i n o r d e r t o f a c i l i t a t e i n v e s t m e n t i n t h e s e
economi-, s e c t o r s .
N i t h t h e a i d of t h e s e v a r i o u s meas7.x-es, the monetary authorities
hope
to ensure the axailability of noninflationary financing
ofdevelopment.
At
t h e same time, t h e C e n t r a l Bank i s t h u s t o g a i n g r a d u a l l y i n c r e a s e d f r e e d o m
it.
to restrain credit should the situation require

The Greek r e p r e s e n t a t i v e s s t a t e d that the Currency Comqittee, consisting

of t h e k e y ecocomic rcinisters and the
Governorof t h e Bank of' Greece,reviews
monthly t h e economic s i t u a t i o n of t h e cou1,try a n d t h a t t h e Committee i s
d e t e m i n e d t o take such s t e p s as may b e n e c e s s a r y t o m a i n t a i n i n t e r n a l
s t a b i l i t y a n d t o continue to strengthen confidence in the national currency.
The Governcentcontinues t o b e commit';ed t o t h e p r o p o s i t i o n t h a t
a str@ng
"_,L,"'""n
"..cy i s t h e v i t a l f o u n d a t i o n f o r a f u r t h e r sound development of t h e
:>rp-7 e c o n o ~ ~ y .
The Greek r e p r e s e n t a t i v e s s t a t e d t h a t t h e
lcarge range of i n t e r e s t rates
a p p l i c a b l et ot h ev a r i o u sc a t e g o r i e s
of c r e d i t s a n d f i e p o s i t s ( s e e P a r t
11,
Table 17) i s j u s t i f i e d b;r t h e monetary authoritj.es as a u s e f u l instrurr,en'; Tor s t i m u l a t i n g t h e n a x i m m volume of s a v i n g s d e p o s i t s a n d f o r e n s u r i n g t h a t
the satrinzs fieposits are u s e d i n a manner which i n t h e i r judgmentwould
f a c i l i t a t e most e f f e c t i v e l y t h e growth i n t h e econozy.
I n o r d e r t o r e d u c e the r o l e of t h e C e n t r a l Bark i n t h e f i n a n c i n g o f
development e x p e n d i t c r e s , t h e Government h a s a l s o i n r e c e n t y e a r s b e e n
f o s t e r i n g t h e development o f a c a p i t a l m a r k e t ; f u r t h e r p r o g r e s s i n t h i s
d i r e c t i o n was achieved between 1958 and 1961.
I n 1960 and 1961, Greek i n v e s t o r s showed g r e a . t e r i n t e r e s t i n Lon& and
shzres. Ronds issued by the GovernventandthePublicPoverCorporationwere
s u b s c r i b e db yp r i v a t ei n v e s t o r sw i t h i n
a s h o r tp e r l o uo f
time. The Public
Tower Corporation issued two loans of Cr 400 m i l l i o n i n 1960 and Dr 500 m i l l i o n i n 1361. Both loans carry
a rate of i n t e r e s t of 7 p e r c e n t f o r a period
of t h e bondsandrepayments
arelinkedto the
of 15 y e a r s ; t h e v a l u e
d r a c h a / U . S .d o l l a r exchange r a t e o r t o t h e p r i c e of e l e c t r i c i t y - . I n
1960,
the Government i s s u e d 5 per cent 12-yezr bonds for D r 750 m i l l i o n t o f i n a n c e
t h e p u b l i c development p r o g r m . 'Ibis l o a n a l s o c a r r i e d a d o l l a rc l a u s e .
For t h e sane puTpose, i n A p r i l 1362, t h e Government borrowed Gr 1,013 m i l l i o n
on l5-year bonds,which c a r r y 5 p e r c e n t i n t e r e s t , a n d a l s o v a r i o u s l o t t e r y
p r i z e sc o s t i n ga na d d i t i o n a l
1.5 p e r ten$ p e r annun. IIoldershavethe
right
t o repa)Xent of p r i n c i p a l , i n t e r e s t a n d l o t t e r y r e c e i p t s e i t h e r
i n drachma
or i n Yhe drachma equivslent of the nominal value in
U.S. d o l l a r s on t'ne b a s i s
of t h e o f f i c i a l p a r i t y a t t h e time qf' ps;,Ent.All public bond issues
also
benefis from varlous tax exemptions.
L i t t l e use however i s made of t h e c a p i t a l m a r k e t b y p r i v a t e e n t e r p r i s e s .
The Greek a u t h o r i t i e s b e l i e v e t h a t t h e l i m i t i n g f a c t o r
i s a l a c k of s u i t a b l e
a shortage of i n v e s t i b l ef u n d s .
Cn variousoccasions,the
i s s u e sa n dn o t
of t h e
Greek a u t h o r i t i e s h w e u r g e d t h e p r i v a t e s e c t o r t o n a k e l a r g e r u s e
are d e s i g n e d t o s t i x u l a t e t h e
capital market, and several fiscal benefits
of shares and bonds;
formation of large-scale corporations and the floating
as a r e s u l t , some relative1.y sinall issues have r e c e n t l y b e e n f a v o r a b l y r e ce i v e d
?'hP 3:conornic Development Financing Srgsnization an3
the Industrial Developcent. C o q o r a t - i o a ar? a!.so e:cper:t.ed io co:liribu+.e to a 7,cicIc11. m j b i l i z a t i o n of
I.cjng- term f l ~ ~ d
& ,s~ l dE. c - ' ; - - ~ ~ i i ~ ~ ~ l l e ol
, . ; i ntile
. . : ccl.pit~:lfl!tLrk5-tt ?jy er;coui*agirlg
ti,c forn,a+,ion of' l.a:.ge ~.cli'po~,ati.on;
3;~
gtving crivat-: iqv-es-tors oppor turlity
t,Q
natTf
,icipa.t:
4
i r i C;-I-:?'~ t.?n-i~>rp.rj.sp::.
I

e >

12

D e t a i l e d d a t a on t h e b u d g e t s f o r
Tables 19-23.

?ART I

1960 and 1961 are given in. P a r t II,,

According t o t h e Greek r e p r e s e n t a t i v e s , t h e b a s i c o b j e c t i v e o f t h e
fiscalpolicyoftheir
Government i n r e c e n t y e a r s
has beentwofold:
(a)
tosecurefrcmnoninflationarysourcessufficient,resourcestofinance
an increasing volume o f investment,and ( b ) t o make suchadjustments i n
the fiscal policy,, especially in existing tax rates
and their applicatio?:,
as may be necessary t o induce a s t e a d i l y growing volume o f p r i v a t e i n v e s t ments i n i n d u s t r y a n d a g r i c u l t u r e . I n c o n n e c t i o n w i t h t h e
f i r s t objective
theypointedoutthatdespitetheincreaseincurrentexpenditures
(sme
6 p e r c e r , t i n 1960 and some 7.5 p e r c e n t i n 1961), the surplus of revecue
overexpendituresincreasedinbothyears.In
1960 it helped t o finance
some 6 p e r c e n t a n d i n 19th some 24 per cent o f government-f' ,nanced i n vestment, despite the fact that the
l a t t e r rose from D r 4 . 1 b i l l i o n i n
1960 t o Dr 5 b i l l i o n i n 1961, o r b y 22 p e r c e x t .

was connected prilnaziiy with

and increased expcnditnres on
education. The l a t t e r are inpartconnectedwiththedevelopment
effort:
t h e a u t h o r i t i e s have come t o t h e c o n c l u s i o n t h a t t o o b t a i n
a f G i l e r am5
more economic u t i l i z a t i o n o f manpower, i t will b e e s s e n t i a l t o re-eriucat?
some workers and t o shift t h e emphasis in secondary education t o technology.
The i n c r e a s e i n c u r r e n t e x p e n d i t u r e s

some s a l a r y a d j u s t m e n t s f o r c i v i l s e r v a n t s

The improvement i n t h e f i s c a l s i t u a t i o n i s dGe p r l m a r i l y t o t h e

i n c r e a s ei nc u r r e n tr e v e n u e ,
which i n 1960 rDse by 6 p e r c e n t . I n
1961
t h e r e was a f u r t h e r sharp i n c r e a s e amounting t o 17 percent.Sinceonly
a few t a x r a t e s were increased, the large increment to revenue
must be
a t t r i b u t e d t o h i g h e r economic a c t i v i t y i n g e n e r a l and t o t h e s u b s t a n t i a l
r i s e i ni m p o r t si np a r t i c u l a r .( & o u t
70 p e r c e n t of' all currentrevenue
i s derived from i n d i r e c t t a x e s . )
The Greek r e p r e s e n t a t i v e s s t a t e d t h a t i n 1360 renewed e f f o r t s were
a l l taxes, but especially
from d i r e c t t a x e s .
made to increase revenue from
For t h a t purpose severalmeasuresweretakenagainsttaxevasion.
They
statedthattheseefforts
haveyielded good r e s u l t s . Revenue from d i r e c t
23 p e r c e n t h i g h e r t h a n i n
1960. Furthermeasures
t a x e s i n 1961 wassome
w i l l be introduced in. the course of t h e c u r r e n t f i s c a l y e a r .
The Greek
representatives s,tated that their
Government considers it e s s e n t i a l t o
a bet-ter tax morale in order not only
t a k e a l l steps necessary to achieve
t o e n s u r e an equitable taxation system end to secure larger revenue
for
thepublicsector,butalso
t o make effective the various tax incentiTVres
introduced in the last
two y e a r s t o e n c o u r a g e i n v e s t m e n t i n i n d u s t , r y a n d
agriculture.
The substantial increase in public irlvestments
would n o t have beer!.
possible had the
Government not had a t i t s d i s p o s a l l a r g e r sums o f
counterpartfundsgeneratedby
U.S. defensesupportaid,
NATO contribuPart 11, Table 20)
Idoreover,
t i o n s and loans from o t h e r c o u n t r i e s ( s e e
t h e Government has a l s o o b t a i n e d s u b s t a n t i a l f u n d s
from t h e s a l e o f

interest-bearing Treasury bills to the banking system and,

1961,inalso
of long-term goverrment bonds to the public. However,1960,
in in contrast to1959, banks found it necessary
tr, reduce their deposits held
this extent the
with the Central Eank in order to acquire the To
bills.
financing of the Government investment program through Treasury bills
1960 added to the expansion
of the money supply. Because of the large
credit expansion to the public and a slowdown
in the formationof savings,
per centof their
despite the decree obliging the big banks to18keep
1961in
only Dr 2EO
sight, time and savings deposits in Treasury bills,
million of Treasury bills were sold as
netagainst Dr 995 million in
1960 and Dr 1,196 million in1959. On the other hand, the Government
1361 some Dr 760 million worth of long-term bonds.
sold to the public in

in

Discussing the 1962 budget, the Greek representatives stated that

current expenditures were raised
by some 13 per cent, primarily to meet
the cost of a rise in the salaries of civil servants and the expenditure
connected with the stepped-up program
of educational reform. As a result
which is expected to continue also
of buoyant economic activity 1961,
in
in the current year, and of a further rise in imports, the authorities
anticipate that current revenue will rise further, especially as the
Government is determined
to enforce with the utmost vigor the existing
tax laws. The budget provides an increase in current revenue
of some
7.5 per cent over the actual collections1961.
in This by itself would
yield a substantially lower surplus over current expenditures than resulted frorn the outturn of
1961, namely some nr 3CO million in 1962,
against Dr1,200 million in 1961. The Greek representatives felt,
however, that the revenue estimates are conservative and that
s u r pthe
lm
will most likely reach the figure 1of
billion.
Dr
The investment budget for
1962 provides for a19 per cent increase
in investment outlays over the amount spent1961.
in As shown in Part11,
Table 20, the Government hopes to secure some
Dr 825 million more in
form of foreign loans and grants, than it
external assistance, in the
received from these sources in1961 (Dr 2,285 million). The budget
a l s o provides for a
65 per cent increase in borrowing from domestic
sources. The Government expects tobe able to sell a larger volume
of long-term bonds to the public than1961,
in and to increase the sale
of Treasury bills to 730
Dr million in 1962. Although deposits in
general, but especially time and savings deposits, have shown a healthy
rate of growth since November
1961 (i.e., after the adjustment in
interest rates), the staff team wondered whether the money market can
provide such large
sums without recourse to the Central Bank, particularly as it is expected that the demand for byfunds
the private sector
will alsobe increasing in1962. It should be noted that in addition
to the investment of Dr6 billion contained in the
budget, the public
sector as a whole plans to invest
an additional Dr 3,564 million, or
1961. The major part of this
sum
about Dr 920 million more than in
represents expendituresby the Public Power Corporation, the Industrial
Finance Corporation and the Agricultural
Bank. (Tor details see Part11,
Table 22.) The Greek representatives stated that should financing from
noninflationary sources not be available, Goverment
the
is determined
to reduce the volume
of its own investments.

I n view of the need for increased resources for development, the

s t a f f i n q u i r e d what progress has been
made toward the reduction of the
subsidiescontai:nedinthebudget.
The Greek r e p r e s e n t a t i v e s s t a t e d
run l a r g e d e f i c i t s , which
that the railroad administration continues to
i nr e c e n ty e a r s
:nave averaged D r 500 m i l l i o n . ( F i n a n c i a l
data on t h e
r a i l r o a d a d m i n i s t r a t i o n are reprpduced in the Appendix , Table2.)
They
maintained that scme progress has been
made i n r e d u c i n g s u b s i d i e s t o
a g r i c u l t u r e , due i n p a r t t o t h e
good marketing conditions for tobacco
and t o t h e c e s s a t i o n o f t h e e x p o r t
ofwheat,
on which l a r g e l o s s e s were
s u s t a i n e d i n 1958 and 1959. For some c o m o d i t i e s , e.g. , c o t t o n , t h e payments of subsidies
were so a d j u s t e d as t o s t i m u l a t e p r o d u c t i o n a n d t h e
The previous main goal of t h e s u b s i d y payproductivityofsgriculture.
ments,namely themaintenanceof
a certain level of
income f o r t h e r u r a l
papulation,hastherebybeenreduced
somewhat inimportance.
The Greek
r e p r e s e n t a t i v e s s t a t e d , however, t h a t t h e s o c i a l a s p e c t s o f s u b s i d i e s
continuetobei:uiportant.
The Government h a sa l s ot a k e ns t e p st oi n d u c e
industries to locate their plants in regions
where t h e y c o u l d c o n t r i b u t e
mosttoward r a i s i n g incomes i n s u r r o u n d i n g r u r a l r e g i o n s .
I n i t s concern for the welfare of the
r u r a l population, and also
to
improve p r o d u c t i v i t y , t h e Government organized in Mzy 1961 a "Farmers'
Social Insurance Organization", which i s to provide old age pensions,
medical and hospital treatment to farmers, and to furnish insurance
a g a i n s t damage t o t h e i r c r o p s
from h a i l a n d f r o s t . ( D e t a i l s o f t h i s
o r g a n i z a t i o na r eg i v e ni nP a r t
11, page 38.) The c o s t o f t h e
scheme i s
t o be b o r n e p a r t l y b y d i r e c t c o n t r i b u t i o n s
from t h e farmers a n d p a r t l y
this
by s p e c i a l t a x e s c o l l e c t e d
from the population as a whole.For
p u r p o s e c e r t a i n new t a x e s were introduced and others were incressed by
a specific percentage, the proceeds of
whichwereearmarked
to met the
financialneedsoftheFarmers'SocialInsuranceOrganization.
The Greek
authoi-itiesesti.matedthatinthe
f i r s t four years of
i t s operation,the
insurance scheme will y i e l d s u b s t a n t i a l s u r p l u s e s , which t h e y i n t e n d t o
use to finance the
Government investmentprogram.

5.

Ealance
of

.payments developments

Data on the balance of

paymentsdevelopments
are reproduced i n Table 1.

in

1959, 1960 and 1961

The most s t r i k i n g f e a t u r e s o f t h e e x t e r n a l t r a d e a n d
payments of
Greece i n r e c e n t y e a r s were a continuous rise in imports, an impressive
g a i n i n receipts fron irwisibles (tourism, shipping and emigrant remitt a n c e s ) , and a s t a g n a t i o n of exports. Between t h e endof 1955 and ?;he
end of 1961 imports (c. i. f . ) rose from $352 m i l l i o n t o $561 m i l l i o n , o r
by 60 p e r c e n t .
Over t h e same p e r i o d , n e t r e c e i p t s
from t o u r i s t t r a d e
increased froma'bout $19 m i l l i o n t o $40 m i l l i o n , n e t r e c e i p t s
from
transportation(shipping)rose
from $36 m i l l i o n t o $91 million, and
emigrantremittancesincreasedfrom
$51 m i l l i o n t o $98 m i l l i o n . Sxports,
however,amounted t o $207 m i l l i o n i n 1955, $208 m i l l i o n i n 1960 and
$234.3 million i:n 1961.

"

"

mports
Exports

payments c . i . f . J
2
r e c e i p t s f .o.b.

21 4f

&her

237 2

-@x
60.3
41.7
20. g
24.7

-54.9
-15.4

?aynAentsf o r s e r v i c e s
Travel abroad
Government s e r v i c e s
Transpnrtation
Cther

Ralance on services
p r i v a t ed o n a t i o c s

and

Balance on current account

f
6

1961

454.8

I
I
_

S e c e i p t s f r o n services and private donations

Emigrant remittances
Transportation
Foreign travel
Coverraent services

1960

-212.5

-242.3

Trade balance

Net c a p i t a l inflow J
2
Foreign a i d
5f
3eFarations
Errors and omissions
seoerves ( i n c r e a s e )

1959

-288.5
273-2

"ga
7f55
51.4
25.8
29.1

-65 5
-18.

-10.3

-8.0

-12.3
-9.2

-21.2

-25.2

162.3

207.7

-60. O

-80.

58. o
38.3
2.8

-6.8
-45 9

48.5
41.8
0.8
5.6

-15.9

Source: Ear& of Greece, Annual Report, 1960, and Monthly S t a t i s t i c a l

A u l l e t i n . March 1962.

A balance of payments p r e s e n t a t i c n i n accordance with the definitions

used i n t h e I W Balance of Payments Yearbock is given i n the Appendix,Table 3.
Excluding EL change in outstanding
balance of s ucprpe ldiietr s '
Excluding machinery imported under
t h e terms of Law No. 2687/53
encouraging
investments
foreign
Excluding food donations under the
terms of U.S. Public Law No. 480,
T i t l e 111
Excluding imrorts of U.S. "corrmnn
useitems'!
Excl.!~ding Amcrtization of B r i t i s h
S t a b i l i z a t i o n Loan

-4.5

7.8

6.0

0.4

0.9

0.2

7.4

7.9

0.0

7.0

6.7

9.7

5*6

2.8

The Greek r e p r e s e n t a t i v e s commented t h a t e x p o r t s , a f t e r h a v i n g i n creased very satisfactorily immediately after the devaluation
cf 1953,
remained a t a b o u t t h e l e v e l r e a c h e d i n
1955 up u n t i l t h e end of 1960.
Some temporary improvements took place in
1957 and 1958, b u t t h e s e were
1958 t h e r e was a l a r g e ($21 m i l l i o n )
c a u s e db ye x c e p t i o n a lf a c t o r s .I n
a crop failure, and
shipmentofGreekwine
t o France which had suffered
i n 1959 t h e r e were e x c e p t i g n a ls a l e s ofwheat.There
was some expansion
of the non-traditional export of cotton
and f r e s h f r u i t , b u t t h i s b a r e l y
r e p l a c e d t h e fal:L i n e x p o r t s of t o b a c c o a n d d r i e d f r u i t s ,
whichthrougho u tt h i sp e r i o dG r e e c eh a dd i f f i c u l t i e s
i n marketing. The Greek r e p r e sentatives found cause for guarded optimism in the export results
of
1961, which,except t o some e x t e n t i n r e l a t i o n t o t o b a c c o , were notbased
f i r s t r e s u l t of t h e
on nonrecurring,developments.Rathertheyarethe
s t e a d f a s te f f o r tt oi n c r e a s et h e
supply of exportableproducts:e-orts
o f f r e s h and c i t r u s f r u i t s y i e l d e d $15.8 m i l l i c n i n 1961 as a g a i n s t $10.6
m i l l i o n i n 1960, and c o t t o n $27.4 m i l l i o n i n 1961 a g a i n s t $19.1 m i l l i o n
Ebove, r e s u l t e d
i n 1960. The i n c r e a s e dr e c e i p t s fromtobacco,mentioned
from a s t r o n g e r demand from Europe and the United States,caused
in part
by t h e f a c t t h a t b l i g h t h a s r u j n e d c r o p s i n
many p a r t s ofEurope.
Because of the difficulties experienced in the export of tobacco
ia
the years 1957, 1956 and 1959, t h e Government had i n r e c e n t y e a r s r e strictedtheareaundercultivation.
Zncouraged by t h e good mark-et
Government has
c o n d i t i o n s i n 1961 and good prospects for 1962, the
to increase the area under tobacco cultivadecided to allow the farmers
t i o n i n t h e c u r r e n ta g r i c u l t u r a ly e a r
by some 20 p e r c e n t .
it i s hoped
t h a t r P c e i p t s fromtobaccoexports
w i l l be f u r t h e r i n c r e a s e d i n 1962.
This hope i s s u s t s i n e d by generzl market conditicns,
as w e l l as by t h e
s p e c i a l l y f a v o r a b l e t r e a t m e n t which tribacco received from the European
Economic CornunityintheTreaty
of :ssociationwi-thGreece.(Fnr
11, page 57.)
d e t a i l s ,s e eP a r t
Taking i n t o c o n s i d e r a t i o n a l s o t h e r e c e n t e x p a n s i o n o f p r o d u c t i o n
of
some o t h e r a g r i c u l t u r a l p r o d u c t s , t h e
Greek r e p r e s e n t a t i v e s f e l t t h a t t h e
upswing in export proceeds evidenced in
1961 w i l l c o n t i n u e a l s o i n t h e
imcoming y e a r s . However, t h e Government i s n o t s a t i s f i e d w i t h t h e s e
provedexportprospects.In
1961 exportscoveredonly
42 p e r c e n t of
t o c o n t i n u et or i s e .R e c e n t l ys e v e r a l
importsandtheseareexpected
t a x and c r e d i t m a s u r e s were t a k e n t o s t r e n g t h e n t h e d r i v e t o i n c r e a s e
are d e s c r i b e d i n P a r t
11,
exports o f manufacturedproducts.(These
page 46.) Thea.im of thesemeasures i s n o to n l yt oi n d u c ee x i s t i n g
firms t o s h i f t c r e n l a r g e t h e i r p r o d u c t i o n f o r e x p o r t , b u t a l s o
t o persuade domestic and foreign entrepreneurs
t o e s t a b l i s h new p l a n t s p r o ducicg Frirnarily for export.
The Greek r e p r e s e n t a t i v e s Ftgreed t h a t f u r t h e r measures are needed t o
secure a f i r m f o o t i n g f o r t h e i r p r o d u c t s i n f o r e i g n m a r k e t s .
They f e l t
rim much could be achieved by persuading domestic prothat in the short
ducers t o s t a n d a x d i z e t h e i r p r o d u c t s , t o
improve packing and shipping of
such products as f r e s h f r u i t so t h a t i t a r r i v e s a t t h e mostadvantageous
time i n t h e l a r g e consumptioncenters of NesternZurope.
With t h i s aim
i n mind, t h e Government h a s r e c e n t l y i n v i t e d f o r e i g n e x p e r t s
t o work with

17 -

TART 1

t h ? a s s s c i a t i n n o f dcmestlc producers t o prepare R p l a n f o r a n e a r l y

and
e f f e c t i v e imyrovement i nt h em a r k e t a b i l i t yo f
Greek products, They
-pointed qut that in recent years, in
th;iabsenceofsuchstandsrdization
and proper classification,
Greek producers were o f f e r e d l o w e r p r i c e s t h a n
t o exert p r e s s u r e
t h e i rc o m p e t i t o r s .T h i s
5n t u r n l e d %heGreekproducers
on t h e i r Government t o e n t e r i n t o an zgreement with scme Soviet bloc
countries in order to secure for
t.herr,"vor1Ci m s r k e t p r i c e s " f o r t h e i r
prqducts. This i s one of t h er e a s o n s why, d e s p i t e t h e f a c t t h a t i n
1961
much more f a v o r a b l e c c n d i t i c n s preT:aile,d in Kestern Surope fqr Greekexo f goods t o t h e ,Sovietbloccountriescontinued
portproducts,shioment
toincrease.
The s h e r e or t h i s r e g i o n i n t o t a l e x p o r t s o f
Greecerose
frcm 13 p e r c e n t i n 11257t c 22.3 p e r c e n t i n 1361.
Duringthe l a s t t h r e e y e a r s t h e r e has been c s u b s t a n t i a l growth of
impnrts, which ros-?from $455 m i l l i o n i n 1959 t o $497 m i l l i o n i n 1960
and $561 millim i n 1961. The Greek r c p r e s e n t s t i v e se x p r e s s e d t h e f e e l i n g
l a s t t,wo years was connected
t.hat a s u b s t a n t i a l i n c r e a s e i n i m p o r t s i n t h e
with. the iqx"pT~e3 standard of living
and stepped up i n v e s t m e n t a c t i v i t y .
Jniporte of agricult,ural prqducts increased
from $61 m i l l i o n i n 1959 t o
$105 m i l l i o n i n 1961. Because of t h e good h a r v e s t , t h e i n c r e a s e
was
c s n c e n t r a t e d p r i m a r i l y on frqzen and fresh meat, live animals, milk and
f e e d g r a i n s , The o t h e rs i g n i f i c e n ti n c r e a s ei ni m p o r t sc c m p r i s e d
rcw
materlzls and machineryconnectedwit,hthedevelopmenteffort.There
i s l i t t l e w i d e m e t h a t l u x u r i e s played a n i m p o r t a n t r o l e i n t h e r e c e n t
expensionofinports.
Tine Greek r e p r e s e n t a t i v e sa g r q e dt h a tt o
some
extenttheincreaseinimports
i s a s s o c i a t e d with t h e grnwing t o u r i s t
trade .
There was a c m t l . n u o u s s u b s t a n t i a l i n c r e a s e i n i n v i s i b l e r e c e i p t s .
On a n e t 'oasis t h e s e rose f r o x $1&12.3m i l l i o n i n 1959 t o $244.1 m i l l i o n
( F n r d e t a i l s ,s e eP a r t
11, p . 51, Table 34.)
i n 1961, o r by 311 p e rc e n t .
A s n:entioned b e f o r e , one o f t h e main c o n t r i b u c i n g f a c t c r s t o t h i s s c b i e v e merit was t h es t e a d y r i s e i ne a r n i n g s from tourism. The Greek representatives stated that the
Government e q e c t s eer?.ingsfrcm t h i s s o u r c e t o
r i s e further. * The e s t a k l i s k m m t o f a f e r r y s e r v i c e between I t a l y and
Greeceand the completion o f a hard-surface highway betweenGreeceand
WesternEurope, via Yugoslavia, should in thci;
view s t i m u l a t e t c u r i s m
f u l t h e r .I n w s t m e n t s
on a s u b s t a n - t i a ls c a l ec o n t i n u e tc be made, and
wouid
t h e Greek r e p r e s e n t a t i v e s f e l t c o n f i d e n t t h a t f o r e i g n t o u r i s t s
cont.i.nue t o r i n d a p p r o p r i a t e a c c o m o d a t i o n m d e a s y a c c e s s
t o places nf
h i s t o r i c a l s i g n i f i c a n c e and t o r e s o r t p l a c e s .
They e s t i m a t e d t h a t n e t
r e c e i p t s from t o u r i s m i n 1962 may increase by about 19 p e r c e n t above
t h e r e s u l t s c f 1961.
The Greek r e p r e s e n t a t i v e s s t a t e d t h a t t h e
Gcvernment e-xpects also
a 10 p e r c e n t i m r e a s e i n t h e r e c e i p t s from shipping.
As a r e s u l t or' heavyemigrationand
good b u s i n e s s c o n d i t i o n s i n
c c u n t r i c s t n which Grceks emigrated, the receipts
fromemigrants' rem i t t a n r e s o r from t r a n s f e r s 9f workers employed abroad have increased
substantiallyinrecentyears.
Althcugh no firm f o r e c e s t c a n be made,
t h e Greek r e p r e s e n t a t i v e s f e l t t h a t t h e s e r e c e i p t s
m i g h ti n c r e a s ei n
1962 also by &out IO p e r c e n t ,

- 18 -

PART i

Comenting on t h e p r o s p e c t s f o r 1962 f o r t h e b c l a n c e of payments as

a whole, t h e Greek r e p r e s e n t a t i v e s s t a t e d t h a t on t h e b a s i s o f t h e i r e s t i mate of e f f e c t i v e demand, t h e y a n t i c i p a t e d a f u r t h e r s i g n i f i c a n t r i s e i n
imports.There
may bean improvement i ne x p o r t s ;n e v e r t h e l e s s ,t h eb a l anceoftrade
would show a d e t e r i o r a t i o n . A s a r e s u l t , t h e e x p e c t e d
increaseinthenetearnings
from i n v i s i b l e s d i s c u s s c d above will merely
prevent a d e t e r i o r a t i o n i n t h e d e f i c i t
on currentaccount.
The nreek
representatives explained that their
Government e - q e c t s t o c o v e r t h i s
d e f i c i t by a n e t ,c a p i t a li n f l o w .
TheGovernment
hopcs t h a t p r i v a t e
c a p i t a l i n f l o w will continue a t l e a s t a t about the rate of recent years
and b e l i e v e s t h a t it might possibly increase as a r e s u l t of t h e Greek
a s s o c i a t i o nw i t ht h e
EXC. The Government a l s o hopes t h a t it w i l l cont i n u e t o r e c e i v e a s s i s t a n c e from the United States and f r c m other sources
on a g r a n t o r l o a n b a s i s .
The Greek r e p r e s e n t a t i v e r s t a t e d t h a t
on t h e
basis of information available
at t h e end of January 1962, c a p i t a l r e c e i p t s i n 1962 w i l l f u l l y c o v e r t h e e x p e c t e d d e f i c i t
on current account
Rnd h e l p t o augment the gold and foreign
exchange r e s e r v e s by some $10
million.
Despitetheimpressive
improvements i n i n v i s i b l c e a r n i n g s i n r e c e n t
years and substantial strengthening of the monetary reserves, the balance
of paymentscontinues t o causethe Government greatconcern.
The t r a d e
d e f i c i t i s largeand, as a r e s u l t of stepped up development e f f o r t , it
must beexpectedthatimports
will continue t n rise. Althoughexports
are expected to respond positively to the effort nf the
Gcvernment t o
g~p in the trade
augment production, it will take years before the
bRlancecanbesubstantiallyreduced.
Hence, despiteimpressive improvements i n i n v i s i b l e e a r n i n g s ,
it i s u n l i k e l y i n t h e f o r e s e e a b l e f u t u r e
t h a t Greececouldcover
i t s d e f i c i t on current account from
i t s own
economic growth.
resources and s t i l l m a i n t a i n t h e p r e s e n t r a t e o f
Although monetary reserves rose in
1961 by $27 m i l l i o n t c $251
million,representingaboutfivemonths'imports,the
Greek representaof public opinion in
Greeceeven a
tives felt that in the present state
furtherverygradualimgovementinreserves
i s important. They s t a t e d
that the relative inelasticity of imports,
and t h e g r e a t s u s c e p t a b i l i t y
of invisibleearningsto
economicandnonecmomic
factorslargelyoutside the control. of the
GreekGovernment, a l s o argues f o r l a r g e r m o n e t a r y
r e s e r v e s . Only t h u s c a n t h e i r a u t h o r i t i e s f e e l c e r t a i n t h a t t h e y
can
safeguard confid.ence i n t h e i r c u r r e n c y a n d t h e p r e s e n t t r a d e a n d
payments
systemagainsttheconsequencesofsuddenshocks.

6.

The r e s t r i c t i v e system
a.

R e s t r i c t i o n s on t r a d e and
payments

The Greek r e p r e s e n t a t i v e s s t a t e d t h a t t h e c o n c e p t
of free trRde and
payments was t h e b a s i c p r i n c i p l e o f
Greek f o r e i g n economic p o l i c y . I n
1960 and 1961 s t e p s weretaken t o r e d u c e r e s t r i c t i o n s on
the course of
tradeandpayments.Althoughindividualapprcval
o f importsandcurrent
pa-pents i s s t i l l rec_uiredtherearepractically
no q u a n t i t a t i v e r e s t r i c tionsineffect
any more. I n 1959, t h e Government had i n t e n s i f i e d

q;.lari-Litati-Je r e s - : r i z t i m s on in;portsfrrJnconvertibLecurl'encycouiltrles
u d a l s o increased ad-vance d e p o s i tr e q u i r e m e n t s .b r i n g
1960, hcwever,
thequotasforimportsofcertaincomodities
from cmvertible currency
c o u n t r i e s e s t a b l i s h e d i n 1959 ( s e e s ~ / 6 0 / 3 2 ,P a r t I , p. 31) were abolished
and aflvance deposit reqbirements were reduced.
TheFund r e p r e s e n t a t i v e s n o t e d t h a t f o r
611 practical purposes liceriE'?s
were r e q u i r e d i n form only,and wondered why t h e Greek a u t h o r i t i e s c o n s i dered it necessary t o me.intainthelicensingprocedure.
The Greek representatives felt that because
of the volatility in the foreign
exchange
it was necessary to maintain the instruments
earnings of the country,
whichwould allow quick reirrqosition of :estrictions
on impcrts should
it.
balance of payments consideration warrant
b.

Payments r e l a t i o c s u n d e r t h e

EM4 agreement

The Greek r e p r e s e n t a t i v e s e x p l a i n e d t h a t paymentsagreementswithin

the frmewcrk of the
3
M
A
. e x i s t e d betweenGreeceand
a l l EMA c o u n t r i e s
vlth the exception of the United
Kingdom.The
purposeofmaintaining
thnynagreements was t o make u s e o f t h e f a c i l i t i e s p r o v i d e d u n d e r t h e
Q 4 l fcr i n t e r i m f i n a n c i n g . I n p r a c t i c e , i n o r d e r n o t t o
make set.tlement
at penalty rates, such credits
as t h e Bank of Greece receives from the
pe.rtr_er countries are usually repaid just before the
end of the monthly
s e t t l e m e n tp e r i o d .
The n e t b e n e f i t t o
Greece i s t h u sv e r yl i m i t e d .

From a technical point of view,

Greece i s e n t i t l e d t o a v a i l i t s e l f
o ft h ef a c i l i t i e sp r o v i d e du n d e rt h e
F'KA agreement. However, underpreseat
LrEde and paymeilt c o n d i t i o n s , t h i s c r e a t e s s u p e r f l u o u s a d m i n i s t r a t i v e
compliceticnsfor i t s XMA p a r t n e r s . The r e l i a n c e on t h i s mechanism does
accord the Bank ofGreece some saving in foreign exchange;
however, it
a l s o t o some extent derogates from the strength of the
drachma, which i s
e x t e r n a l l y c o n v e r t i b l e a n d which i s supported by a s u b s t a n t i a l volume o f
monetary reserves.
The Greek r e p r e s e n t a t i v e s s t a t e d t h a t t h e
Bank ofSreece was alsc
availingitselfofthefacilitiesprovidedunderthe
EMA agreementbecame
it could thus more e a s i l y m a i n t a i n i t s monopoly i n f o r e i g n exchange
d e a l i n g s . They e x p r e s s e d t h e . f e e l i n g t h a t f o r t h e t i m e b e i n g t h e
Greek
aonetary consolidation had not advanced
t o t h e p o i n t a t which t h e Bank
ofGreececouldabandonthecentralized'management
of t h e economy's
foreignexchmgeresources.'.Inresponseto
a question,theystatedtha.t
t h e r e wereonly a few c o m p l a i n t sf r o ma b r o a d . a g a i n s tt h i sp r a c t i c e .
They
thought that the negative effect
onGreek economy t h a t ma.y r e s u l t frm
the fact that the
commercialbanks t r a n s a c t b u s i n e s s i n f o r e i g n
exchange
only as agents of' t h e Bank ofGreece was compensatedby t h e advan-cages
men-ticned above.

c .B i l a t e r a lt r a d e

20

PAiiT 7

andpaymentsagreements

Greece maintains b i l a t e r a l t r a d e and payments agreements with five

Fundmembers (Finland, Yugoslavia, Israel,
B r a z i l , and theUnited Arab
Republic)andwithsevenSovietareacountries.
The agreementwith
Yugoa1s;via p r o v i d e s t h a t 20 p e r c e n t of Y u g o s l a v i a ' s r e c e i p t s a r e t o b e
paid monthly in convertible currency.
The agreementwithFinlandprovides f o r a settlement every four months i n c o n v e r t i b l e c u r r e n c y of 50
per cent of balances outstanding
beyond t h e c r e d i t m a r g i n of $75O,COO.
The agreement with the United
Arab Hepublic i s of a s F e c i a i c h a r a c t e r
and w i l l be discussed below.
I n viewof The s u b s t a n t i a l volumeof trade which i s t r a n s a c t e d
w i t h i n t h e framework of t h c b i l a t e r a l t r a d e andpaymentsagreements,the
s t a f f team i n q u i r e d how t h e Government ensures the implementation of
b i l a t e r a l agreements on the import side, since
much ofimports i s
l i b e r a l i z e d from all sources. The Greek r e p r e s e n t a t i v e se x p l a i n e dt h a t
a d i s t i n c t i o n s h o u l d b e made between private and government imports frcm
b i l a t e r a lc o u n t r i e s .
A s regards governmentimports,which
amount t o
some 10 per cent of total imports, the Minister of Trade
was authorized
It
by l a w t o approveimportsaccordingtotheinterestsoftradepolicy.
was i n t e n d e d , t h e y s t a t e d , t o
make onlyreAsonableuseofthisauthority.
Government importsfrom bilateral countries consist mainly of equipment
f o r t h e P u b l i c P:3werCompany,
for telecommunications, public
worksand
h o s p i t a l s , snd c:rude o i l f o r t h e p u b l i c o i l r e f i n e r y .
A t present private importers have complete freedom
t o choose t h e i r
sourcesof supp1;y. Hence, i f t h e y e l e c t t o i m p o r t
from a countrywith
which t r a d e i s governed by a b i l a t e r a l t r a d e and psyment agreement, they
do so presumablybecauseofpriceorotheradvantages.
The onlyexceptior,
t o t h i s r u l e i s sugar, where the private importer has to submit proof
that the imports originated
from a country with which Greece has
a valid
b i l a t e r a l t r a d e a d paymentsagreement.

(1) B i l a t e r a l agreements with Fund members

The s t a f f team explored with the

Greek r e p r e s e n t a t i v e s t h e
reasons for maintaining payments agreements with individual find
members.
The Greek r e p r e s e n t a t i v e s e x p l a i n s d t h a t i n t h e i r
view, t h e agreementwith
it provided some c r e d i t s a n d because
Finland was useful for Greece because
it f a c i l i t a t e d t h e e x p o r t of such 'items .es sultanas and fresh grapes.
The
Greek r e p r e s e n t a t i v e s a g r e e d t h a t t h e a d v a n t a g e s d e r i v e d
from t h i s a g r e e would give
ment are a t b e s t m a r g i n a l , a n d s t a t e d t h a t t h e i r a u t h o r i t i e s
c a r e f u l c o n s i d e r a t i o n t o a Finnish proposal (mentioned in recent consultations with the
Fund) t o t e r m i n a t e t h i s a g r e e m e n t .
A s regards the agreement with Yugoslavia, the
staff team i n q u i r e d
whether the payment o f 20 p e r c e n t of imports from Yugoslavia i n convertible currency constituted the annual average deficit with that
it would n o t b e f e a s i b l e t o r e n o u n c e t h e b i l a t e r a l
country, and whether
agreement and e f P e c t a l l payments on a c o n v e r t i b l e basis. The Greek
r e p r e s e n t a t i v e s ; s t a t e d t h a t o c c a s i o n a l l y Greek d e f i c i t s were much l a r g e r .

PAkT

I n 1962 they do n o t e x p e c t t h a t t h e d e f i c i t
w i l l exceed 20 per cent of
payaents. They f u r t h e r s t a t e d t h a t t h e y
wereundertheimpressionthat
t h e YugoslavGovernment was s t i l l i n a p o s i t i o n t o c o n t r o l t h e volume
and t h e d i r e c t i o n o f i m p o r t s ,
and t h a t Yugoslav e n t e r p r i s e s andimports
were not y et f r e e t o a c t as do e n t e r p r i s e si nG r e e c e .A c c o r d i n g l y ,i n
their t,rade policy they cnnsidereZ Ycgoslavia
s t i l l as a s t a t e t r a d i n g
country. The s t a f f t e r n e x p l a i n e d t h a t
as p a r t o f t h e s t a b i l i z z t i o n
to
p r o g r L m . i n i t i a t e d i n J a n u a r y 1961, Yugoslavia had decided further
decenh-ali ze i t s economy and i n i t s t r a d e andpaymentssystem
t o reduce
s u b s t e n t i d l y r e l i a n c e on b i l a t e r a l i s m . The s u b s t a n t i a l autonomy a l r e a d y
as t o importagiven t o i n d i v i d u a l economic e n t e r p r i s e s c n v e r s d e c i s i o n s
t i o n and e x p o r t a t i o n . Eience, t h e s t a f f Team urgedthe Greek a u t h o r i t i e s
t o re-examine t h e i r p o s i t i c n .

With regard tr, I s r a e l , t h e Greek r e p r e s e n t a t i v e s f e l t t h a t I s r a e i ' s

imyorts were e i t h e r d i r e c t l y c o n t r o l l e d o r s t r o n g l y i n f l u e n c e d b y t h e
Government,and that accord.ingly a b i l a t e r a l t r a d e andpaymentsagreement was h e l p f u l t o Greek e x p o r t s . The s t a f f team s t a t e d t h a t d e v e l o p meats i n r e c e n t y e a r s i n t h e I s r a e l i
economy h a d a l l o w e d f o r s u b s t a n t i a l
and t h a t s t a t e e n t e r p r i s e s hadbeen
expansion of the private Peetor,
gaiiling more freedom t o malie t h e i r own decisions.Thistrendshould
g a i n s t r e n g t h as t h e measures connected with the recent exchange reform
t m k hoi?.
In view cf t h e s e f a c t s , t h e
staff team suggested that the
Greek a u t h o r i t i e s s h o u l d r e c o n s i d e r also i n t h i s c a s e t h e i r p o s i t l o n .
With regard to the agreement with Brazil,
it i s noted that imports
i n t o B r a z i l from b i l a t e r a l payment agreement comrtries are favored
by a
5 per cent discount a t which b i l a t e r a l c u r r e n c i e s a r e s o l d .

(2)

B i l a t e r a lt r a d e
~-

andpn7gentsrelationswithnomembers

A s indicated above, some 11 per cent of a l l Greek imports

t h eS o v i e tb l o cc o u n t r i e s .
A t p r e s e n tt h e s ec o u n t r i e st o g e t h e r
with ot.her c o u n t r i e s v i t h whichGreecehas
b i l a t e r a l t r a d e andpayments
agreements e n j o y c e r t a i n p r i v i l e g e d t r e a t m e n t as far as the purchases of
t h e govemment sectorareconcerned.
The staffinquiredaboutreasons
for this discrimination and
why t r a d e w i t h t h e S o v i e t b l o c c o u n t r i e s h a d
expanded g r e a t l y i n r e c e n t y e a r s .
C O E ~from

The Greek r e p r e s e n t a t i v e s r e p l i e d t h a t t h e i r c o u n t r y
mustexpand
i t s elrports and that
a major consideration of trade with the Soviet
bloc c m n t r i e s v a s t h e w i l l i n g n e s s o f t h i s b l o c t o
buyGreek products.
The overwhelming majority of Greek export items are agricultural products subject to special import licensing procedure in nearly
a l l nons t a t et r a d i n gc o u n t r i e s .
Some oftheproducts,forinstancetobacco,
areortenimported
bygovernmentmonopolies.For
thesereasonsGreece
&oes not have a r e a l l y f r e e a c c e s s t o t h e i r m a r k e t s .
They pointed out
also that the discrimination practised in
government purchases abroad
was being kept for obvious
in favor of the state trading.countries
reasons t o t h e minimum. They agreed, however, t h a t i n t h e
l a s t two
years the access to the fl.ee trading markets has
become e a s i e r , and
that therefore the lack of progress in the
sale of Greek products on

Western European markets especially,

must b e a t t r i b u t e d i n p a r t t o o t h e r
1961
factorsthanthosementionedabove.
The staff p o i n t e d o u t t h a t i n
the biggest increase in exports to Eastern
Europe was a c h i e v e d i n c i t r u s
fr;lit.s, sultanas:,turpentine,cotton,andhides
and s k i n s ,i t e m sf o r
which
demand was a l s o r a t h e r good elsewhere.(Receiptsforexportsoftobacco,
a t r a d i t i o n a l market
f o r which some of the Eastern European countries are
o f Greece, fell i n 1961 t o t h i s r e g i o n . )
To a considerabledegreethese
r e s u l t s must b e a t t r i b u t e d t o t h e b m g a i n i n g a d v a n t a g e
which t r a d e r s of
tho state trading countries
have i n markets where s e l l e r s a r e n w e r o u s
producers CT Frocheersassociations.
They can u t i l i z e f u l l y t h e a b i l i t y
given t n -them by t h e i r f o r e i g n t r a d e t e c h n j . q u e t o r e d u c e t h e a t t r a c t i v e ness of t h e Greek; market t o o t h e r b u y e r s . T h i s t h e y
do e i t h e r by temporarily raising prices in market with strategically plcced offers or
by
being willing to be less exactlng in specifying classification
asd
packingfor goods bocght on t h e Greek market. Such i n t e r v e n t i o n , i n t h e
s t a f f view, may s e r i o u s l y a f f e c t tl.e a g r i c u l t u r a l p o l i c y o f G r e e c e ,
as
o u t l i n e d i n an e a r l i e r s e c t i o n o f t h i s r e p o r t .
I t retards theexpansion
of production f o r the markets of WesternEuropeand
deltxys the necessary
improvements i n p r o d u c t i v i t y .
Beyond t h i s it makes theimplementation
o f a consistent long-range policy
i n regard to agricultural production-which i s t h e aim oftheGovernment--ratherdifficult.
Moreover,should
Eastern Zuropeccritinue t o a b s o r b even the present stare of exports
as
theseexpand,theelement
of d i s c r i m i n a t i o n p r e s e n t i n t h e
Greek r e s t r i c t i v e system would. hcve t o be f u r t h e r i n c r e a s e d i f Greece i s t o c o l l e c t
through i t s importstheproceeds
of i t s e x p o r t s , which i s one of t h e
objectives of Eastern
European t r a d e p o l i c y .

Payments

arrmgements with the United Arab Republic

Pa.yments arrangcments with the UAR a r e g r e a t l y a f f e c t e d

by l a r g e and p e r s i s t e n t o u t s t a n d i n g b a i a a c e s i n f a v o r o f
Greece, which
r e s u l t from t r a n s f e r s o f c a p i t a l t o
Greece by former Greek residents of
t h e UAR. An agreementconcluded i n 1958 provided for paymen-ts by the
UAR of the balance outstanding
a t t h a t t i m e o f $17 m i l l i o n i n a n n u a l
installmentsinfreeforeignexchange.
I n 1962 t h e GreekGovernment
agreed to spread the
repaymentof t h e l a s t tranche, payable on June 15,
1962 over a p e r i o d o f t h r e e y e a r s .
E a r l y i n 1962, when the balance in favor
of Greece threateried t o
exceed once again the margins provided
under the agreements, the
Urni
stopped a l l f u r t h e ri m p o r t so f
goodsand servicesfron:Greece.
To
facilitate trade .md transfers
from t h e U M , Greece has instituted
a
systemwherebyimportsfrom
t h e UAR r e c e i v e s u b s i d i e s , which a r e n e t
from surcharges imposed on Greek e x p o r t s t o t h e UAR and on proceeds
of current and ca:?ital invisibles.
Any l o s s which t h e C e n t r a l B a i i
makes on t h e s e t r a n s a c t i o n s i s covered from the budget.
I n 1961 t h e d i s c o u n t a p p l i e d on conversion of Egztian pounds i n t o
drachxnas hasbeen 5 per cent for proceeds
of tobacco exports, 15 t o 20
per c e n t f o r o t h e r major Greek export items, and
30 p e r c e n t f o r a l l
o t h e re x p o r t s .
The d i s c o u n t sa p p l i e dt or e m i t t a n c e sf r c mi n v i s i b l e
transactionsrangefrom
15 t o 30 p e r c e n t . A c c o r d i n g t o r e c e n t r e p o r t s ,

23

PALT 2.

t h e s e discoun-is werecnanged f r o m A p r i l 1, 1962. Iicnceforth a l l major

3C p e r
exportitems a r c s;lbJclct t o a discount ~f 20 p e r cerlt, while the
c e n td i s c m n tr - n n t i n l w st ob ea p p l i e d
t o t h er e m i n d e r .
The discounts
on r e c e i p t s f r o m i n v i s i b l e s remain a t 1 5 t n 30 per cent, depending
on
thetype o f t r a n s a c t i - n .
TheBm-k
ofGreece
sells Egyptianpounds, f o r
settlement o f payments t n t h e UAR f..,r im-pzrts, a t a discount ranging up
-to 25 per cent o f tYLeo f f i c i a l exchange r a t e depending on t h e t y p e o f
t r a r s a c t . i o n . The Grcek r q r e s e n t z t i v e ss t a t c dt h a tt h i sa r r a n g e m e n t
is
of a temporarynat,ure and designed t o d e a l w i t h a n e x c e p t i o n a l s i t u a t i o n .

IV. S+Eff
A-pprtiisal
I n 1.561 t h e economy ofGreecehad
a remarkably good year. The
xhievcment of an i n c r e m e .rf 11 p e r c e n t i n t h e g r o s s n a t i o n a l p r o d u c t
inconditionsofpricestability,
accompaniedby some f u r t h e r s t r e n g t h ening of the external
payments p o s i t i o n , vast be regarded as anencouraging
s t e p t,ow&rd t h e g o a l whichGreecehac
set itself: to find productive
employrent f o r i t s l a b o r f o r c e and t o n8rrow t h e gap which now e x i s t s
Setween t h e Greek standard of l i v i n g a n d t h a t p r e v a i l i n g i n
Wcstern
Eur rl? c

Obviously an incre&s? of
t h a t magnitude i n t h e n z t i o n a l p r o d u c t
is
the result of
a ccuvsrEence of several specially favcr.-ble circumstances.
Crood weather conditions,
combined w i t h t h e f a c t t h a t
1961 was t h e h i g h
production year i n t h e b i e n n i s l p r o d c c t i o n c y c l e i n o l i v e s
and some o t h e r
fruits, benefited the crops
t o an important extent.
The r i s i n g l e v e l o f
t h r e c e i p t s from inincome i n i n d u s t r i a l c w n t r i e s f a v f 3 r a h l y a f f e c t e d
v i s i b l e s . HGwever, these r e s u l t s c m l d n o t havebeenachievedexcept
f o r t h e Government's p u r y s e f u l clevelcyment p o l i c y :t h es u b s t a n t i a l
i n c r e a s e i n a g r i c ~ ~ l t u r ? . J . F r m L l w t i n n i s i n p a r t the? r e s u l t cf t h e Governm e n t ' s e f f o r t s t n raise p r o d u c t i v i t y a n d p r q d u c t i w qf those products
which a r e more readily marketable at home and abroad.Zncouragedbythe
r e s u l t s t h u s f a r achieved,theGovermenthasincreased
its effort in
Mx-e favnrablemarketconditionswithintheareaofthe
t h i ss p h e r e .
AurQpean Economic Crrmunltyskould f a c i l i t a t e i t s t a s k i n t h i s r e g a r d .
in order to attain the desired progress,
it
I n th? s t a f f vi?w,lif'wnver,
w i l l ?;e Eecessary fcr much more a t t e r , t i o n t h a n h i t h e r t o t o be p a i d t o
t h e w g a n i z a t i o n of' xarkcting srrangements of the
Greek farm products,
e s p e c i a l l y i n t h e larg? cmsumptioncenters of WesternXurope.Such
marketing arrengemc=.n-tswould also h e l p t o reduce the present heavy rel i a n c e on b i l a t e r a l t r a d e a r r a n g e m e n t s w i t 1 1 t h e S o v i e t b l o c c o u n t r i e s .
"

I n 1961 t h e r e was a l s n an impressive gain in the production of

t r a d i t i o n a li n d u s t r y .
L i t t l e progress, however, was made i nt h ee s t a b l i s k e n t of new i n d u s t r i a l u n i t s .
Nor i s t h e r e , as yet,evidencethat
t h e traditions1 industry has taken steps
whichwould allow it t o expand
p r o d u c t i mf o re x p o r t .
The Government i s consciousofthis,andhas
takonvariousmeasures
t n encourage the establishment of
new i n d u s t r i a l
e n t e r p r i s e s bydomesticandforeignentrepreneurs.Until
now, t h i s
p o l i c y aces n o t seem t o have been very effective. In the
s t a f f ' s view,
t h e main r e a s o n f o r i t s r e l a t i v e i n e f f e c t i v e n e s s i s t , h a t i n l i c e n s i n g

24 -

PABT I

If the Five YearDevelopmentprogram

i s t o b e f u l l y implementedby
t h e endof 1964, p u b l i c a n d p r i v a t e i n v e s t m e n t i n t h e
last three years
will have t o b e s u b s t a n t i a l l y i n c r e a s e d .
This w i l l r e q u i r e
o ft h ep l a n
a sharp increase i n t h e volumeof i n t e r n a l s a v i n g s , p u b l i c a n d p r i v a t e .
Accordingly, the principal task of fiscal
and monetary policy in the
periodahead w i l l be t o act.ieve c r i s e i n t t e v o l m e of savings. '

The Government's f i n a n c i a l p o s i t i o n h a s b e e n s t r e n g t h e n e d i n t h e
l a s t two years. The questionremainswhether
t h i s improvement i s s u f f i c i e n t i n t h e lighr, of the varied and expensive
tasks which, under t h e
i s t o accomplish.Industryandagridevelopment p l a n , t h e f i s c a l p o l i c y
as an inducement forinvestment.
A t the
cultureexpecttaxconcessions
same time t h e Government f e e l s committed t o f i n a n c e an increasing vdume
o fi n f r a s t r u c t u r e ,
as well as i n d u s t r i a li n v e s t m e n t .
A s & r e s u l t of
various tax concessions and increased current expenditures, the surplus
1962 i s estimated
of c u r r e n t r e v e n u e o v e r c u r r e n t e x p e n d i t u r e s i n f i s c a l
t o besmallerthan
was achievedin 1961. Hence t o f i n a n c e t h e volume of
investments contained in the
1962 budget, the Government w i l l have t o
r e l y on s u b s t a n t i a l l y i n c r e a s e d &mounts of money fromabroadandfrom
thedomesticcapi-talmarket.Thesesources
of financing are u n c e r t a i n .
It i s questionable whether personal
savings will r i s e as much as i n t h e
last few years, and moreover t h e Government w i l l have t o cozpete for them
w i t ht h ep r i v a t es e c t o r .
It i s p o s s i b l et h a th e n c e f o r t hf o r e i g na s s i s t a n c e
than be given
may be a s s o c i a t e d much more w i t h s p e c i f i c p r o j e c t s , r a t h e r
i n t h e form of general balance
of payments support, with the
result that
it would n o tg e n e r a t ef r e e l yu s a b l ec o u n t e r p a r tf u n d s .
I n thesecircuras t a n c e s t h e s t a f f f e e l s t h a t , if theGoverment i s t o fulfill i t s p a r t i n
the investmentprogram,measures
t o reduce tax evasion
should bepromptly
should
and f u l l y implementedand f u r t h e r i n c r e a s e s i n c u r r e n t e x p e n d i t u r e
beavoided as much as p o s s i b l e . I t i s r e a l i z e d t h a t s u b s i d i e s t o a g r i economicand s o c i a l f u n c t i o n .
c u l t u r e a t present have an important
However, as t h e s e are absorbing substantial funds needed for investment,
t h e staff f e e l s t h a t t h e i r u s e f u l n e s s s h o u l d b e c a r e f u l l y r e v i e w e d . T h i s
holds t r u e e q u a l l y o f t h e s u b s i d i e s g i v e n t o t h e r a i l r o a d a d m i n i s t r a t i c n .
Throughout t h e p e r i o d s i n c e t h e s t a b i l i z a t i o n
of t h e d r a c h m , i . e . ,
s i n c e 1953, t h e F u b l i c h a s b e e n r e c o n s t i t u t i n g
i t s cash holdings, and tkus
saving,on a s u b s t a n t i a l s c a l e , money c r e a t e d by t h e C e n t r a l Bank. Aven
i n 1961 the C e n t r a l Bank increased i t s c r e d i t t o t h e economy by Dr 1,618

- 25 a i l l i o n o r by 11 p e r c e n t of t h e t c t a l money supply.This
wes an impor,taxt
l5 p e r c s n t i n t h e monetary c i r c u l a t i o n i n 1961,
factor in the increase of
following a 19 per cent expansion in
1960. The Greek monetary a u t h o r i t i e s
a r e aware t h a t t k e p e r i o d i s ending i n which e x t r a o r d i n a r y i n c r e a s e s i n t h e
means ofpaymentshavebPen
possible without detrimental effects
on p r i c e s
2nd the balance qf payments.Henceforththedevelopment
i n t h e money
supply w l l l have t o be observed with the utmost care lest confidence in
t h c drachma i s weakened, a r e s u l t which night have a f a r - r e a c h i n g d i s t u r b i n g
econcmic p o l i c i e s of t h e Government. I n
i a p a c t on a whqlc rangeofthe
view o f t h i s f a c t ,
it i s of the utmost importance that investment institut i , m s l i k e the A g r i c u l t u r s l Bank should cease t n depend on t h e C e n t r a i
Bsnk f o r funds t o b e l e n t f o r l o n g - t e r m
development. M.1 t h i s r e i n f o r c e s
t h e need t os t i m u l a t et h ef o r m a t i o no fp r i v a t es a v i n g s .
To t h i s end, t h e
recent increase in interest
rates on savingsand time deposits should be
'nelpf'ul, as s;?ould t h e v s r i n u a measuresdesigned t o r e a c t i v a t e p u b l i c
i n t e r e s t i n thc c a p i t a l m a r k e t .
Except f o r t h e development n f exports, the balance of
payments 9n
current account has been substantially strengthened in recent years.
Despite the fact that impnrts rose by about
$209 m i l l i o n between 1955
and 1961, t h e d e f i c i t s on c u r r e n ta c c o u n td u r i n gt h i sp e r i o c
.
averzged $70 m i l l i o n a year. A s t h e s ed e f i c i t s wgre more thancovered
by U.S. a i d andbyaninflow
o f c a p i t a l from p r i v a t e and public sources,
Greece was a b l e t o a c q u i r e a reasonable mount of f o r e i g n exchangereserTre;,This improvement was p r i m a r i l y due t o s u b s t e n t i a l i n c r e a s e s i n r e c e i p t s
f r o m i n v i s i b l e s . There i s e v e r yr e a s o nt ob e l i e v et h a t ,g r o v i d e dt h e r e
i s no m s j o r r e c e s s i o n i n i n d u s t r i a l c o u n t r i e s , r e c e i p t s
from i n v i s i b l e s
w i l l c o n t i n u et o r i s e i nt h ey e a r s
ahead.Despitethe
improvement r e g i s t e r e d i n l$l, a major e f f o r t i s e s s e n t i a l t o achieve a s u s t a i n e d r a t e cf
growth i n exports. Suchan improvement i ne x p o r t s i s iicpcrtant,notonly
t n achieve
to strengthen the external
payments p o s i t i o n , b u t a l s o i n o r d e r
t h eo v e r - a l l development o b j e c t i v e s .S u b s t a n t i a l
improvements i nt h ep r s d u c t l v i t y of z g r i c u l t u r e a n d i n c r e a s e s i n i n d u s t r i a l i z a t i o n
w i l l not be
a t t a i n e d unless g r e a t P f f o r t s s r e made t o produce a t i n t e r n a t i o n a l l y
c o m p e t i t i v ep r i c e s .
Hence t h e staff f e e l s t h a to b s t a c l e sh i n d e r i n gt h e
be r e s o l u t e l y s e t a s i d e .
expansion of such competitive production should
the vQlume of e - T o r t s would
However, even under very favorable conditions
grcw onlyslowly.Inthe
meantime,Greece
will have t o r e l y on an inflow
of' c z p i t a l f r m ?-broad t o c o v e r t h e d e f i c i t
on currentaccount.
The s t a f f
believes th&t the FAiility
o f Greece t o o b t a i n new loans fromabroad woula
be g r e a t l y s t r e n g t h e n e d i f the negotiations for the resumption of the
amortization payments on Greece's pre-World War I1 debts, which were
i n t e r r u p t e d scme time a g q , were t o b e concluded t o t h e m u t u a l s a t i s f a c t i c n
o f the parties concerned.
An i m p o n a n t c o n t r i b u t i n g f a c t o r t o w a r d t h e s t a b i l i z a t i o n o f t h e
at the
n a t i o n a l ecnncmy was Lhe s u b s t a n t i a l l i b e r a l i z a t i o n o f i m p c r t s
time of t h e d e v a l u a t i o n of t h e drachma,even
though a t t h a t t i m e it was
n o tf e a s i b l e t o abolishimport3.icensing.Sincethat
time t h e economy
has grown considerably stronger and t h e monetaryand f i s c a l instrumen-ts
h w e proven t h e i r e f f e c t i v e n e s s i n m R i n t a i n i n g i n t e r n a l b a l a n c e a n d
strengthening o f t h e e x t e r n a l s e c t o r . I n
viewof t h i s , it seeins t o t h e

26

PART I

staff thkt the time

has a r r i v e d f o r a t h o r o u g h s i a p l i f l c a t i m of the
presentimportprocedurzsThiswculdrepresentanothzrstepinstrengthening confidence in the
econcmy and it would n c t cause m y s i g n i f i c a n t
i n c r e a s ei ni m p o r t s .
The staff f u l l y a p p r e c i a t e s t h e r e a s o n s
which i n t h e p a s t prompted
Gr-occe t o seek t c s z c u r e m a r k e t s f o r i t s p r o d u c t s t h r m g h b i l a t e r a l t r a d e
andpaymentsagreements.These
r e a s m s heve cezsed t o operatevis-&-vis
most member c o u n t r i e s cf t h e Fund with whichGreecehas
bilateral agreemqnts.Accordingly,the
s t a f f f e ? l s t h a t Greeccshouldagreewiththe
p a r t n e r c o l ~ n t r i c sconce;-ne& tc-,terminate them a t t h e e a r l i e s t c p p c r t u n i t y .
It i s r e a l i z e d t h a t t r a d e w i t h s t a t e - t r a d i n g c o u n t r i e s
i s animportantfactorin
Greek exportandproducticn.
However, t h e s t a f f b e l i e v e s
that the present trading and
payment arrangemmts with this group
of
c o u n t r i e sr e p r e s e n t s a d i s t u r b i n g f a c t n r i n t h e p u r s u i t
of t h . e development objectives of Greece, i n a d d i t i c l n t o p e r p e t u a t i n g d i s c r i m i n a t i o n
a g a i n s t i t s o t h e rt r a d ep a r t n e r s .T h e r e f o r e
it i s s u g g e s t e dt h a tt h e
Government, should re-exnmine i t s p o s i t i o n i n r e l a t i o n t o t h c s e a r r a n g e mentsand take such s t e p s as would h e l p t o r e d c c e t h e i r u c f a v o r a b l e
impact onGr2ek production and on i t s t r a d e andpayments r e l a t i o n s w i t h
t h e rest of the world.

PAF.T I

Recomendat inns

??e foI.lowing draft. d e c i s i o n i s s u b m i t t e d l o r c o n s i d e r a t i o n b y t h e

Executive Board:

Section

XIV,

The G?vermentofGreecehasconsultedthefindunderArticle

1..
jk,

of t h e Fund AgrePment c o n e e r n i c g t h e f u r t h e r r e t e n t i o n o f

its

transitional arrangements.
2.

h r i n g 1960 and 1961 t h eg r o s sn a t i o n a lp r o d u c ti n

incrmsed. by

4 and

r e a l terms

1960 t h e growth

11 p e r c e n t r e s F e c t i v e l y . I n

stimlat.-d by increased govarrnent expenditures, especially

on i n v e s t -

1561 a l l elements

ments and increascd receipts from invisibles, while in

o f demand c o n t r i b u t e d t o theimpressive

was

economic expsnsion.

Wages,

s a l a r i e s andfarm

income were s i g n i f i c a n t l y raised b u t v i r t u a l s t a b i l i t y

vas maintainedin

1961. Although i n t h e f i r s t two y e a r s t h e rate

invcstaent postdated in the

achieved:there
beca.useof

l96? to lg6k developmentprcgram

was an important reduction in

l a r g ee n i g r a t i n n .

the resulting surplus

was net

unemployment, i n p a r t

A high l e v e l of e c o n o n i c a c t i v i t y a n a

sharpriseinimportscontributedtofurthersubstantial
cusrentrevenueofthe

of

improvement i n

Government and as c u r r e n t e x p m d i t u r e s r o s e
made a m a j o r c o n t r i b u t i o n t o t h e f i n a n c i n g

pAblic: investments.Inbothyearsthe

money supplyrose

r a t e , part1.y because there was a continued heavy relimce

less,
of

a t a very h i g h

on Central

Bank financing of a g r i c u l t u r a l i n v e s t m e n t a n d p r i c e s u p p o r t o p e r a t i o n s .

3.

The implementation o f t h e development p l a n w i l l r e q u i r ea n

increased volume o f p u b l i c and p r i v a t e s a v i n g s .

t o obtRinsuch
increasethe

a r a t e ofsavings,

The Fund b e l i e v e s t h a t

it i s e s s e n t i a l for t h e Government t o

surplus i n i t s currentbudgetthroughmeasurescapableof

reducing sharply

28 -

FAX i

tax evasion and by r e s t r a i n i n g c u r r e n t e x p e n d i t u r e s .

These measures, together with stsps in the xcnetary sy.hcre designed to

r e s t r a i n th? expension i n t h c money supply t o t h e l e v e l c o m p a t i b l e w i t h
of internal price

thernaint?iance

s t a b i l i t y , should h e l p t o strengthen

f u r t h e rc o n f i d e n c ei nt h en a t i w a lc u r r e n c y .T h i s ,i nt h e

i s o. p r e r e q u i s i t e f o r further bnlanced

F\l;nds view,

dcvelopme7.t of the

fortheencourageneatnfpersonalsavings.

TheFund

made i n t h e lczst tr.~oyears in hroedening thr capita?

Aconmy and

n o t e st h ep r o g r e s s
mqrkntand

in re-

o f the A g r i c u l t u r a l Bank on t h e Bank o f Gr,?ece f n r t h s

ducing rcliance

f i n m c i n g o f i t s .Lendir&. TheFund

t n strengthtm

b e l i e v e st h a ti no r d e r

are

theeffectivenessofmonetarypolicy,furtherstepsinthisdirectim
urgep t .
There w a s a f u r t h e rs u b s t a n t i a ls t r e n g t h e n i n gi nt h eb a l a n c e

4.

ofpayments.
and i n

In

1~960and 1961 r e c e i p t s from i n v i s i b l e s rose appreciably

1961 t h e w was

sharply.

Receipt::from

publir: scurces

a l s o animproveEent

in expprts, but imports rose

U.S. a i d and i n f l c v of c a p i t a l from p r i v a t e a n d

were l a r g e r t h a n t h z d n f i c i t

t a r yr c s e r v e si n c r e a s e d .
million,equaling

A t theendof

on c u r r e n t a c c m n t and mone-

1961 t h e y m o u n t e d t o

abrllt f i v e months imports.

in order to stren@,then the balmce

$251

TheFund

b e l i e v e st h a t ,

of p a p e n t s f u r t h e r ,

a majoreffort

t o expmd exports i s necessary.

5.

Sincethe

whichhadbeen

last c o n s u l t a t i o n ,r e s t r i c t i o n s

intensifiedin

and d i s c r i m i n a t i m ,

1959, havebeengreatlyreduced.

However,

import prncedures remain excessively complicated and Greece continues

t o r e l y t a a s u b s t a n t i a l d e g r e e on b i l a t e r a l i s m i n i t s e x t e r n a l t r a d e

and p q m e n t s .

The Fund b e l i e v e s t h a t

a s u b s t a n t i a ls i m p l i f i c a t i o no f

- 29

t h e importprocedures

PART 1
I t al-so considers that

i s f e a s i b l e anddesirable.

the s i t w t i o n allows a h r g e r e d u c t i o c i n t h e r d i a n c e

especially

iil

r e l a t i o n t o Fund members andurgesGreece

t o stat? trcding.

t o t a k e early

o n r e s t r i c t i o n s and

action tmard a substsntial re+lction in reliance

discriminztim,in?lu;ting

on b i l n t c r a l i s m ,

thc.t s r i s i n g f r o % t h e import p c l i c y a p p l y i n g

Tbe 3x13 d o e sn o to b j w t ,

a tc-xporary basis, t o

the misting multiple cusrmcy practice.

6.

I n conclv-ding t h e 1961 c o n s u l t a t i o n s ,t h e

c o m e n t s t o makn

,211

Fund has no o t h e r

t h e t r m s i t i m a l nrrcngemcnts mnintained

by Greece.

C O N " N S CONFIDXMTJAL
INFORMATION

GREZCE

Packground Material for 1961 Consultations

Prepared by t h e Zurcpean Department and
t h e Exchange Restrictions Departnent

Contents

Page
iii

1.

N a t i o n a li n c m e ,p r o d u c t i o na n d
prices
a. Driginanduse
of resources
0. @"culturalprcduction
c,
I E C u s t r i apl r o d u c t i o n
(i j IdmuL'acturing
( ii ) I'.qining a n d power
(iii) Snippingandtourism
d. P r i c e sa n d wages

2.

aevelopaent program

3.

Money and c r e d i t

1
1
1

Ceveiopments i n money supply

C r e d i t t o t n e p r i v a t es e c t o r
c .C r e d i tt o
the Government
d. Konetary a n dc r e d i tp o l i c y
e . Developnents i n t h ec e p i t a ln a r k e t

a.
b.

4.

Public
finance
2.

b.

c.

d.

C e n t r a l government b u d g e tr e s u l t sf o r

1960 and 1961

Goverrmentbudget
f o r 1962
Governmect s u b s i d i e s
(1) A g r i c u l t u r e
( ii ) Railroads
S o c i a ls e c w i t j r f o r farmers

29

29

35
36
36
36
38

ii

Contents(continued)

5.

Balance of payments

40

a.
b.
c.

40
50

d.

6.

Foreigntrade
Invisibles
P r i v a t ec a p i t a l ,f o r e i g na s s i s t a n c e
and external debt
Monetary r e s e r v e s

RelationshipwithEuropean

a.
b.

7.

Page
-

Economic Community

Transactionswith nember c o u n t r i e s of EEC

A s s o c i a t i o nw i t ht h e
Zuropean Ecocomic Community
i. Customs union
(1) Creationof common e x t e r n a ln a r k e t
( 2 ) Adoptionofcamonexternal
tariff
( 3 ) Specialprovisions for Greek a g r i cult-mal exports
( a ) Tobacco
( b ) Currants and s u l t a n a s
( c j F r e s hf r u i t s
( d ) Other
ii. Promotion of economic union
iii. F i n a n c i a al s s i s t a n c e

R e s t r i c t i v e System
a'. The exchange r a t e
Nonresident accounts
b.
P r e s c r i p t i o n of currency
C.
6. Imports and import payments
e. Exports and export proceeds
f . Invisibles
Capital
12. Payments agreements

50
52

53
53
54
54
54
56
56

57
57

58
58
58
58
5.9
59
59
60
60
62
62

63

64

Appendix
Table 1. Bank of Greece:AgriculturalSupportAccounts
Expenditures
and
of Railways
Table 2. Revenues
Table 3. Balance of Fayxents
Table 4. Commodity D i s t r i b u t i o n of Imports
Table 5. I n p o r t s from Eastern Europe
astern to
Europe
Table 6. EExports
Foreigr,
Debt and
Service
Obligations
Table 7. Postwar
Agreements
Payments
on
Table 8. Balances
and
Payments
Agreements
of Greece
Table 9. Trade
Table 10. Tourism

66
67
68
70
75
78
80
83
84
92

PART 11

Gross national product in real terms increae3

by 4 p e r c ? ~ : ir: i96.I and
by 11. p e r c e n t i n
1961. A g r i c u l t u r a l incnKe declinedby 6 p r c e n t i n
1960, w h i l e i n d u s t r i a l incnme increasedby 9 p e r c e n t . I n
1,961,a g r i c u l tural income increased by 18 p e r c e n t , l a r g e l y
as a r e s u l t nf a n e x c e l l e n t
h a r v e s t ,a n di n d u s t r i a l
income r o s e b y 7 p e rc e n t ;s e r v i c ei n m m ea l s o
asset f o r m a t i n n ( e x c l u d i n g t h e t r a n s i n c r e a s e d b y 7 percent,Grossfixed
f e r t o t h e Greek f l a g of Greek-owned s h i p s ) expandedby 22 p e r c e n t i n 1960
and 15 p e r c e n t i n
1961. Investments in 3-961were e q u a l t o one f i f t h of
thegrossnationalproduct.
The r+.t,e of gmwth ir- puc1.ic s e c t o r invest,mers.t
was more t h a n t w i c e t h a t
of private sector investment.
I n 1961, the cotten crop under the
Government-sponscredprogram r o s e
byabout one t h i r d . The aree p l a n t e d w i t l n wheat was reduced, kxt t h e y i e l d
peracreincreased.Therc
wzs a recordcrop of d i v e s a n d f r e s h f r u i t s
and thetobaccccrop
was 1-9 p e rc s n tl a r g e rt h a ni n
1960. In 1961~
p r i c e s c b t a i n e d by farmers were almost 6 p e r c e n t h i g h e r t h a n i n
1960,
n a i n l y as a r e s u l t n f Government price-support measures, w h i l e p r i c e s p a i d
by farmers rose by less than 1 per cent.
I n d u s t r i a l p r o d u c t i o n was 8 p e r c e n t h i g h e r i n
1960 than i n 1959 and
t h e r e was a f;ultlzer r i s e of 6 p e r c e n t between 1960 and 196i. " h e l a r g e s t
lncreases occurred i n the building and machinery industries.
Tne mining
cf l i g n i t e rcse s h a r p l y a n d t h e g e n e r a t i o n
qf e l e c t r i c i t y i n c r e a s e d by 15
percentin
1960 and 1 3 p e r c e n t i n 1961. I n b o t h y e a r s , t h e r e
w%s a subGreek f l a g ,
s t a n t i a l i n c r e a s e il? theshippingtonnageregisteredunderthe
which now anmunts t c scme 6.4 m i l l i o ng r o s st o n s .
The trarzsfer ofships
from " f l a g s nf convenience" t o t h e Greek f l a g was f a c i l i t a t e d by a series
clf p r i v i l e g e s g r a n t e d b y t h e
GreekGovernment.
The t o u r i s t i n d u s t r y ais@
expanded r a p i d l y i n 1960 and 1961. Thenumberof
t w r i s t s v i s i t i n g Greece
r o s e b y 18 p e r c e n t in 1960 and 25 p e r c e n t i n 1961.
A p l a n f c r t h e p e r i o d 1960-64 s e t s t h e f r a m w c r k f o r p u b l i c
and p r i v a t e development e f f w ts. The p l a n aims a t a 6 p e r c e n t r a t e
of growth
and a s t r u c t u r a l r e o r g a n i z a t i o n of t h e econcmy toward high-yielding crops
i na g r i c u l t u r e ,i n c r e a s e di n d u s t r i a l i z a t i c n
and expanding exserts. ;?.ctual
ackievernents lagged behind target, but
a l a r g e number of p r - \ j e o t s i s i n
t h ep r e p a r a t o r ys t a g e .
On t h eo t h e r hand, t h e i x r e a s e i nr e a l
gr3ss
n a t i c m l p r o 2 u c t h a s been higher i n t h e f i r s t two y e a r s t h a n p o s t u l a t e d
by t h e f i v e y e a r prngram.

P r i c e developrrients i n 1960 and 1961 were a s s c c i a t e d l.arp;ely w i t h t h e

movement o f p r i c e s 02 s p e c i f i c a g r i c u l t u r a l c o m x o d i t i e s , i n p a r t i c u l a r
The average ofwhclesaLe
o l i v eo i l ,p o t a t o e s ,r i c ea n dd a i r yp r o d u c t s .
p r i c e s was 2.3 p e r c e n t h i g h e r i n
1960 t h a n i n 1.959, and 1.5 per cent higher
i n 1960 t h a n i n 1gcj1.

iv

PART I1

Wage i n c r e a s e s i n i n d u s t r y amounted t o 4-5 per cent i n each year.

S a l a r i e s ofgovernmentemployeeswere
also r a i s e d by 6 t n 12 per c e n t i n
both years.
Money supply continued t o expand and increased by
19 p e r c e n t i n 1960
andby 1.5 p e r c e n t i n
1961. I n b o t h y e a r s , c r e d i t s e x t e n d e d t o t h e p r i v a t e s e c t o r were l a r g e r a n d t h e i n c r e a s e i n s a v i n g s
and demand d e p o s i t s was
lowerthan i n 1959. The expansionaryeffect of thepublicsectorthrough
financing public investments remained high
i n 1960 but declined substantially
1961, t h e
i n 1961 a s a result of l a r g e r d e p o s i t s by p u b l i c i n s t i t u t i o n s . I n
increase in gqld and foreign
exchange r e s e r v e s a l s o added considerably tcl
monetary expansion.
Since the second half of
1959, t h e Greek monetary policy has been
c h a r a c t e r i z e d by a g r a d u a l r e l a x a t i o n of s p e c i a l c o n t r o l s onbank c r e d i t
with the aim of t r a n s f e r r i n g t h e a u t h o r i t y of c o n t r o l t o t h e commercial
banks i n o r d e r t o s i m p l i f y t h e c r e d i t
mechanism.
I n March 1961, t h e amount
t h e commercialbanksmust
h o l d i n T r e a s u r y b i l l s of t o t a l s i g h t and savings
The purposeof this change was
d e p o s i t s was r a i s e d from 1 0 t n 18 per cent.
t o p r e v e n t t h e banks from using their excess holdings
of Treasury h i l l s t o
ex3and c r e d i t .
I n the autumnof
1961, i n t e r e s t r a t e s on timedeposits were increase?
t o o f f e r s a v e r s more favorable terms and
t o encourage them t o t u r n tr\ time
d e p o s i t s i n s t e a d of savingsdeposits:withdrawable
on demand.
The Agriculttcral Bank o b t a i n s t h e major share of i t s funds from t h e
Bank of Greece. I n t h e l a s t two years, there has been
a reduction of t h e
r e l a t i v e s h a r e of C e n t r a l Bank financing, as non-budgetary public institut i o n s have been induced
t o make a v a i l a b l e t o t h e A g r i c u l t u r a l Bank a l a r g e r
p a r t of t h e i r funds. Ccmpulsory c o l l e c t i o n s of f r o z e n c r e d i t s i n connect i o n with Government p r i c e s u p p o r t of a g r i c u l t u r a l p r o d u c t s have also been
introduced.

I n 1960and :~961, t h e r e was a f u r t h e r s t r e n g t h e n i n g of t h e c a p i t a l

Governmarket.Largebondissues
by t h e Public Pnwer Corporationandthe
mentwere
successful. Such issuescarrypurchasing
power g u a r a n t e e s .I n
A p r i l 1962, t h e Government i s s u e d bonds forabout D r 1 b i l l i o n . Some small
p r i v a t e s h a r e issues were a l s o f a v o r a b l y r e c e i v e d .

I n recent years, current budgetary revenue has risen

faster than currentexpenditure.
The currentsurplusplusrevenue
frominvestments
1960 and 1961,
financed 19 and 35 per cent of budgetary investments in
r e s p e c t i v e l y . Dorrlestic borrnwingandcounterpartfunds
of f o r e i g n a i d and
loans financed t h e r e s t .

- v -

PART T I

Current revenue rose by

6 p e r c e n t i n 1960 and by 17 per cent i n 1961.
The m i n f a c t o r s z c c o u n t i n g for t h e s e i n c r e a s e s were t h e h i g h e r l e v e l of
economic a c t i v i t ya c dl a r g e r
imrorts.
I n 1960 and 1961 c?lstoms r e c e i p t s
amounted t c 31 p e r c e n t and d i r e c t t a x e s -to 22 per cent af
total cwrer_t
revenue

The 1962 budge i; provid3s for a 1.3 per c e n t i n c r e a s e i n c u r r e n t

expecdituresandfor
a 19 p e rc e n t r i s e i n investments.Currzntrevenue
is
e s t i D a t e C t o grow by 7 per cent.
The o v e r - a l l b u d g e t a r y d e f i c i t
i s exp e c t e d t o i n c r e a s e from D r 3,325 m i l l i o n i n 1961 t o Pr 4,820 m i l l i o n i n
1962, o r by 49 p e rc e n t .
SonetThatmore than one t h i r d of t h e 1962 d e f i c i t
vi11 L s cotrered r o m domestic
borrowin?.
Counterpart
funds
of
foreign assis-Lance Lo cover the renainder
nf t h e d e f i c i t a r e e s t i n a t e d to
be 36 F e rc e n th i g h e rt h a ni n
1961. The n a i ni n c r e a s e si nc u r r e l l te x p e n d i Znii
t u r e tire f o r s a l a r i e s , wages, pensions,eciucation,healthandwelfare,
for t h e s e r v i c i n g of publicdebt.
The main i n c r e a s e s i n the investment
budget are f o r i n d u s t r y anci mining, and tomism.
I n May 1961, a s o c i a l s e c u r i t y s y s t e n f o r the -rural population was
introduc,ed.This
scheme ccmblnesold-agepensicns,zedicalandkospital
treetmentandinsurance
of c r o p s a g a i n s t h a i l a n d f r o s t .
About c n e t h i r d
of tliecost will b e x e t by d i r e c - t c o n t r i b u t i o n s of t h e i n s u r e d , t h e r e I-4mier will becovered b y i n c r e a s e d t a x a t i o n .

The roain f e a t u r e s or the balance of p a p e r , t s .in 1960 and l 9 % 1were

rising izports, and
a r i s i n g s w p l u s on irwisible account, and
e
currentaccountdeficit
of eqLcl s i z e in esch of t112 two years r : .
The inflow of p r i v a 5 e c a p i t a l a n d f o r e i g n a i d
not only covered the deficit
on c>=rer?taccount out a l s o a l l o w e d a Gradual irnprove?xnt i n monetm-y r e serve s .

i t e y s -to S o v i e tc o u n t r i e s
cur; a t s and sultanas.

vi

are f r e s hf r u i tc o t t o n ,t o b a c c o ,

PART I1

as well a s

Net r e c e i p t s :from i n v i s i b l e s amounted t o $208 m i l l i o n i n 196G ar,d t h e y

were equal t o t h e proceedsfrom exports ofgoods.
I n 1961, n e t r e c e i p t s
rose by 18 percent t o $244 n i l l i o n . Gross r e c e i p t s from t r a n s p o r t a t i o n
34 per c e n t i n 1961; gross r e c e i p t s f r c x
r o s e by 27 per cent in 1960 and by
t o u r i s m rose by 23 p e r c e n t i n 1960,andby
33 p e r c e n t i n 1961, andemigrants and workers remittances increased
by 4 per cent i n 1960 and by 14
p e r c e n t i n 1961.
The Governmen% h a s i n v i t e d t h e c o o p e r a t i o n
of f o r e i g n c a p i t a l a n d
firms t o undertake new or p a r t i c i p a t e i n Greek i n d u s t r i a l e s t a b l i s h m e n t s .
havebeen
Eowever, until now, p r i v a t e c a p i t a l i n v e s t n e n t s b y f o r e i g n e r s
r e l a t l v e l y small. P r i v a t ec a p i t a li n f l o wo r i g i n a t e sl a r g e l yw i t hG r e e k s
residing abroad.
Net p r i v a t e c a p i t a l i n f l o w amounted t o $49 m i l l i o n i n
1960and $84 m i l l i o n i n 1961. Gold and foreign exchange reserves rose
by
8 p e r c e n t i n 1960 and by 12 p e r c e n t i n 1961 t o $251 million, and are eq.Jal
t o more t h a n f i v e months I imports.
I n J u l y 1961, Greeceand t h e members of t h e Em-cpean Econceic Ccr11n1~mi-Ly
signed a t r e a t y a s s o c i a t i n g Greece wj-th t h e Comnunity, to beccme e f f e c t i v e
a f t e rr a t i f i c a t i o nb yt h ec o u n t r i e sc o n c e r n e d .
The t r e a t ye s t . q b l i s h e s R
customsunionbetweenGreeceandthe
Community, ccmyjrisicg a Fya6uel elirnL,+l
t i o n of t a r i f f s a n d q u a n t i t a t i v e r e s t r i c t i o n s between Greece and tSe EEC
coxntries and the adoption
of t h e c c m o n e x t e r n a l
tsriff of t h e Ccrrmunity
for imports fromt:nirdcountries.
The customsm5on i s t o be achieved %riL.-i n 12 years,unlessexceptionsareprovided
f o r . These exceptionsnainly
concern the import
of i n d u s t r i a l p r o d u c t s manufacture<; i n Gr-ecce f o r %rhicn
a 22-yearperiodhasbeenagreed
Epon. S p e c i a l p r o v i s i o n s f a c i l i t a t e
the
e - q o r t of Greek a g r i c u l t u r a l commodities such 8 s tobacco,ccrrantsand
s u l t a n a s ,f r e s hf r u i t sa n do t h e r st o
EEC c c y a t r i e s , The a s s o c i e t i o n agreement al.so provides for harmonization of econcmic policy bettreen Greece
-2!lO.
the Comunity, and Greece
w
l
i obtain developzent loazs t o h e l p y p e d :.;?
t h e a d a p t a t i o n of i t s economy t o t h a t of t h e r e s t or t h e Conm-unity. Grecc:.
will become a full1 member of EEC a f t e r a t r a n s i t i o n periiod of 12 years.
I n 1960 and 1961, r e s t r i c t i o n s on t r a d e and payments were reduced.
Although individual approval
on importsandcu7rent
payments j-s s t i l l
r e q u i r e d , t h e r e a m p r z c t i c a l l y no q u a n t i t a t f v e r c s t r i c t i 2 n s . i . n eflfeek.
I n 1959, q u a r L t i t 3 t i v e r e s t r i c t i o n s had been i n t e n s i f i e d 0 d . i n p G r t S from
con-rertible currency countries,
ani! advance deposit recpirements had been
o;P c e r t a i n coF?z3increased.During1960
however the quotasforimports
dities frcn c o n v e r t i b l e c u r r e n c y c o u z t r i e s e s t a b l i s h e d
i n 1953 were
crbollshed and adva-icc deposit reqoirements vere reduc2d.

E'ayments agreements within the framework of t h e ZP!A exist. betveen

Grehce en& a l l ZW- coimtries with the exception
or" the United Kic~dom.
The purpose of maintaining these agreercents
i s t o make use cf t h e
E:4A for interin? financing.
facilities provided under the
Greece naintains bilateral trade and paynents agreemnts
>::lth f i v e
Fusd merrbers (Finland,Yugoslavia,
I s r a e l , Brazil, and t h e United Arab
Republic)andwithsevenSovietareacountries.Bilateraltradeaccounte?.
f o r one t h i r d of Greek exports and 18 per cent of Greek imports i n 1961.
There i s no d i s c r i n i n s t i o n i n f a v o r of p r i v a t e tra6e wi-th b i l a t e r a l agre.zsentcountries,exceptforsugar.Goverment
i q c r t 3 , which accourt for
soxe 1 0 per cent of t o t e l i q o r t s , may be e f f e c t e d a c c o r d i n g t o t,he i n t e r e s t s of track policy.
Specialarrangementscontinuetobeineffect
for payments with the
UAR, i n v i e w o f l a r g e c a p i t s l t r a n s f e r s
t o Greece by former Greek r e s l dents of t h e Urn. Thesearrangerncntsinvolve
a discount of up t o 25 per
cent granted by the
Ea& of Greece on the purchase
of E g p t i a n pounds,
a n d v a r i o u s s u r c h r g e s on t h e sale of export proceeds ranging fron
15 t o
30 p e r c e n t .

- 1 -

I.

1.

P*hBT I1

Domestic Xconoraic Developments

Bationzl income, production and prices

"

a.

Originanduseofresources

Grossnati.ona1 income i n 1960, a t c u r r e n t p r i c e s , r o s e

by 6 per cent
terms was 4 per cent). Agricult o Dr 84.9 b i l l i o n ( t h e i n c r e a s e i n r e a l
t u r a l income was 6 percentlower
i n 1960 t h a n i n 1959, while manufacturing
income roseby 9 percent.
Fer capitana-trona1 income i n 1960 was about
D r 1,COO, o r $333 (see Table 1).
I n 1961, grossnationelinccxe,
e5 c - x r e n t a n d c o n s t a n t p r i c e s , r o s e
by 11 p e r c e n t t o D r 94.4 b i l l i o n , A g r i c u l t u r a l
income roseby 18 p e r
cent as a r e s u l t of a n e x c e l l e n t h a r v e s t e n d
Government p r i c e s u p p o r t .
per
I n d u s t r i a l income r o s e b y 7 p e r cent, ( e s p e c i a l l y i n c o n s t r u c t i o n , -1-16
percegt.
c e n t ) ,a n ds e r v i c e
income a l s cr o s e by
Gross f i x e d a s s e t f o r m a t i o n ( e x c l u d i n g t h e r e g i s t r a t i o n
of ships)
i n c r e a s e d b y 22 p e r c e n t i n r e a l t e r m s i n
1960, and by 15 p e r c e n t i n 1961.
Investments i n 1961 accounted for one f i f t h of the gross national product.
'?ne rat,e of grotJ?;h of p u b l i c s e c t o r ii,=.iestment was 38 p e r c e n t i n 1960 and
24 p r c e n t i n 1961, w h i l e t h e i n c r e e s e i n p r i v a t e i n v e s t a e n t
was i4 p e r
c e n t i n 1960and 10 p r c e n t i n 196; (see Table 2 ) .
b.

LSSL

A g r i c u l t u r a pl r o d u c t i o n

The share of a g r i c u l t u r e i n t h e ~ r ' o s sn a t i o n a l income d e c l i n e d i n t h e

34 F e r c e n t i n 1955 t o 28 p e r c e n t i n 1961 while t'arning

;rev years from

contillues t o employ abouthalf of thecountry'sactivepc?ulz?ion.

I n t;ie
early 'fifties, arable land under cultivstion
Ta.s expanded considerably
through reducing fallow fromaboutone
f i f t h t o one s i x t e e n t h of t h e
arable land, but
by now t h e limit of p r u d e n t l a n d e x p l o i t a t i o n w i t h p r e s e n t
techniques of productionhasbeenreached.
Grzii;_ c r o p s i n 1959 amountea
t oa b o u th a l f
of thecultivatedarea,Cotton,tobacco,pulsesandvegetables
accounted for about 30 p e r c e n t , o l i v e s f o r
10 Fer cent a n d other orchards
fortheremaining
10 p e r c e n t . A S r i c u l t u r a l p r o d u c t i o n i n
Greece i s
hampered s e v e r e l y by t h e f a c t t h a t a l a r g e m a j o r i t y of farm holdings C C i i s i s t of very m a l l u n i t s .

PAPT 1
I

- 2 -

Table 1

..

Yxtional Income byOrigin,TotalResourcesandTheir

a t current market prices

Use1/

( I n b i l l i o n s of drachmas)

1959

1958
Agriculture
Planufacturing
Trade
Public administration and defense
Transportation
Construction
Income from abroad
Other
Gross n a t i o n a l income
Gross national product
Net import of goods a n d s e r v i c e s
Total available resources

23.8
14.2
8.8
5* ' T
5.5
3.5
1.8
14.6
-

1960
22.9

16.3
9.6
6.6
6.3
4.6
2.4
11.2

"

75.9

84.9
79.9

87.2

95.8
90.2

7.-6

rn

rn

Gross investmen-;
Private
Public
Change i n stoCk:j

13.1

(12.2)
( 3.9)
( 0.6)

Source: Bank of Greece,Monthly

Data include import

27.0
19.2
11.3

7.7
7.5
5.4
2.8
19.1
100.0

78.1
79-5
84.7
(67.7) (67.9) (72.0
(10.4)
(11.6) (12.7
19.2
24.1
16.7

Consumption
Private
Public

centPer

88.0
12.0
1EZ

22.1
(-0.3)

Statistical Bulletin.

"-

of s h i p s ( s e e p ~ 6
. and 50belcv).

T a b l e 2 . Gross FixedCapitalFormationExcludlng
R e g i s t r a t i o n of Ships, a t constant 1954 p r i c e s

( -~ m
n i l l i o n s of &achrnas)

1959
Gross investment
Private
Public

4,077
2,c60
2,737
Agriculture
1,224
1,503
Industry
1,245
L l e c t r i c power
' T r a n s p o r t a t i o n a n d c o m w i c a t i o n s 4,9503,8962,277
Housing
5,029
Tour i s m
265
Ctner
68:
586
l

190

1961

5;644

6,985
2 7 970
1.7 305

1,264

5,614
306

1,250

5, 868
402
813

PART I1

- 7 J

In 1360, a g r i c u l t u r a l p r o d u c t i o n W D S 6 per cent lcwer then in

1-55?;
i n 1361, however, it rose by 1 5 percent(seeTzble
3). In 1961, weather
ccnditions were exceptionally good, and f o r scme c r o p s ( F a r t i c u l a r l y
cycle.
o l i v e s ) t h i s m s t h e peak year of t h e i r t m - y e a r p r o d u c t i o n
The o l i v e and f r u i t h a r v e s t i n 1961 surpassed the previous recorl!
r e g i s t e r e d i n 1959. The c u l t i v a t i o u ofhighqualitycotton,which
is
supported by t h e Governmentand c o n s t i t u t e s now a major item i n Greek
ig60 and 30 p e r c e n t i n 1361, as l a n d
exports, rose by 8 p e r c e n t i n
previously used for wheat
was planted with cotton.
It i s e s t i r r a t e d t h a t
s i n c e t h e b e g i n n i n g of t h e G o v e r m e r t ' s cempaign t o s h i f t tcward crops
with higher yields,
s@me600,OCO s t r e r n a s l / p r e v i o u s l y c u l t i v a t e d by wheat
havebeenused
for cotton grcwing.
The T.rheat crop declined %y 6 per cent
i n 1360 andby a f u r t h e r 5 p e r c e n t i n
1961. In 1961, t h e a r e a p l a n t e d
v i t h 17hca-L was reduced by zbcut 10 per cent. 'T:he h i g h e r y i e l d i n wheat
Table

2.

AgriculturalProduction

(In thsusands of toons )

1-959
index o f t o t a l a g r i c u l t u r z l
production (1954 = 100)
Index o f plant production (1954 = 1CO)
bn1eat
VegetEbles
Potrtoes
hlses
Eice
Cotton
Tobacco
Clive o i l
Citrus fruit
Grapes
Currants
Sultanas
Fresh fruit
Source: Ea-Le suppl.ied by Greek a u t h o r i t i e s ( F l i n i s t r y

"
"

1960

97

25

1961 -

89

55

of A g r i c u l t u r e ) .

production resul-ted partly from favorable weathcr conditions and partly

from improved methods o f c u l t i v a t i o n . The tobsccocropin
1.961was about
one-fifth larger than
in 1960 'out it was s t i l l 1Gwcr than thz 1959 crop
s i n c e Fart of t h e h e r v e s t was damaged by tobacco mildev, a p l a n t d i s e a s e
t h a t appeared f o r t h c f i r s t time in Greece and
also a f f e c t e d other Eurclpean
countries.

'"TJTstrenxa

equals
acre.

-4-

PART I1

Government influences ogriculture through the granting

of premiaand
subsidies, and through imposing restrictions
on acreage designed t o d i r e c t
as well as . . . .
the ccmposition and quantity of agricultural production,
through the income s u p p o r t p o l i c i e s . l /
The Greekdevelopmentprogram
aims
a t a s t r u c t u r a l improvement i n t h e p a t t e r n ofGreek a g r i c u l t u r e b y s h i f t i n g
production toward exportable crops
with h i g h y i e l d s andimprovement i n
livestockproduction.Duringtheperiod
1959-69, c e r e a l p r o d u c t i o n i s
estimated to increase only slightly, while part
of t h e area h i t h e r t o c u l t i v a t e d b y c e r e a l s will be u s e d f o r o t h e r c r o p s ; t h e
share of c e r e a l s i n
t o t a l a g r i c u l t u r a l p r o d u c t i o n i s t o d e c l i n e from 21 p e r c e n t i n 1959 t o
16 p e r c e n t i n 1969. The production of c o t t o n i s t o increase by more than
2 0 6 , i t s s h a r e i n t o t a l value of a g r i c u l t u r a l p r o d u c t i o n i s e s t i m t e d t o
m e production of f r u i t , v e g e t a b l e s a n d
i n c r e a s e frcm 4 t o 9 p e r c e n t .
l i v e s t o c k i s t o expandby more than 50 p e r c e n t , and sugar beet production
is t o be introducedinGreece.
Tobacco c u l t i v a t i o n w i l l be expanded if
w a r r a n t e db yi n c r e a s i n ge x p o r tp o s s i b i l i t i e s .
The average annual rate
of
growth of a g r i c u l t u r a l p r o d u c t i o n i c s e t
a t 3.5 p e r c e n t .
It is intended
t h a t employment i n a g r i c u l t u r e s h o u l d remin a t t h e 1959 l e v e l of scme
1.7 m i l l i o n p e r s o n s , a n d t h a t t h e i n c r e a s e i n p o p u l a t i o n
shoulc? f i n d employment ia industry and services.
Investment i n a g r i c u l t u r e d u r i n g t h e p e r i o d 1960-04 i s estha-ked a t
Dr 16 b i l l i o n , h a l f of which i s t o be undertaken by the Government, mainly
i n t h e form ofland improvement ( e s p e c i a l l y i r r i g a t i o n ) . P r i v a t e i n v e s t ment i s divided evenly between livestock
improvement, land improvement,
agricultural machinery and equipment,
as well as f i x e d i n s t o l l a t i o n s
Mark e t i n g i s t o be improved through b e t t e r met'nods of s o r t i n g and packing, as

v e l 1 a s t h e i n s t a l l a t i o n of r e f r i g e r c t i o n equipment. Privateinvestment
i n a g r i c u l t u r e i s b e i n g f a c i l i t a t e d b y long- and medium-term loans granted
on s p e c i a l l y f a v o r a b l e terms by t h e A g r i c u l t u r a l Bank; loans for D r 6
b i l l i o n a r e t o be g r a n t e d i n t h e y e a r s 1360 t o 1964.
U n t i l 1959, p r a c t i c a l l y t h e only form of continuous government p r i c e
support was f o r wheat i n o r d e r t o s u p p o r t a g r i c u l t u r a l
incomes.Other
price
sapport measures were decided
on a n a d h c c b c s i s t o a n t i c i p a t e
o r remedy
d i s t u r b a n c e si nt h e
supply o r p r i c e s t r u c t u r e . S i n c e
1959, p r i c es u p p o r t
and l i v e s t o c k t o achieve
l o l i c i e s are a p p l i e d a l s o t o c o t t o n , f o d d e r c r o p s
t h e o b j e c t i v e s of t h e Government developmentprogram.
Vheat pr-icesupport
i s carried out through announcement of b a s i c s u p p x t p r i c e s a t which t h e
offered by the farmers.
Govemment's purchasing agency purchases any quantity
P r e f e r e n t i a l p r i c e s are p a i d t o s n a l l e r p r o d u c e r s
as shovn i n T a b l e 4. In
1961, t h e b a s i c s u p p o r t p r i c e t h a t h a d been lowered i n 1960 was r a i s e d a g a i n
are s l i g h t l y
t o the l e v e l p r e v a i l i n g in 1959; p r e f e r e n t i a l s u p p o r t p r i c e s
h i g h e rt h a ni n
1959 and 1960. It i s e s t i r r a t e d t h a t i n 1961, wheatgrowers
E? lower
enjoyed an i n c r e a s e i n t h e i r incomes of about 10 p e r c e n t , d e s p i t e
wheatcrop.Bread
p r i c e s were a l s o i n c r e a s e di n 1961. The i n c r e a s ei n -the
wheat p r i c e v a s combined w i t h c o l l e c t i o n s frcm the farmers o f t h e i r d e b t to

m e A g r i c u l t u r a l Bank.
To enforce t h i s measurecashpayments
f o r wheatsold
i n t h e free xrarket were p r o h i b i t e d a l l Fa;)lments had t o b e made i n checks
payable t o t h e A g r i c u l t u r a l Bank.

L?

Table

4,

VueatSupportFrices

( I n drachma p e r kilogram)

1958

Solmce:

National Bank of Greece,Greece

1959

1960

Today, August

1961

1961-

The exyansion and improvement of l i v e s t o c k i s encouraged by t h e Government through granting premia per hectare
of fodder crops, low c o s t c r e d i t
f o r the purchase of animals, and Government c c n t r i b u t i o n t o t h e e s t a b l i s h lnent of d a i r i e s .

The Kational TobaccoBoard purchases low q u a l i t y t o b a c c o on behalf Of

t h e Govermnent i f dcnesticmarket prices f a l l belqw minimum l e v e l s . Tobacco
p l a n t i n g i s a l s o subject t o a c r e e g e r e s t r i c t i o n s .
In 1561, no supportpura l l available stocks could be sold
i n the free
chases were necessary since
market,. Consequently, t h e c e i l i n g on t h e area for tobaccoplanting was increased frorr: lio6,OOO h e c t a r e s t o 130,COO h:hctares.
Support prices for c u r r a n t s and s u l t a n a s i n 1961 were t h e same as t h o s e
was combined
i n e T f e c t i n 1960. " h e announcement of o f f i c i a l s u p p o r t p r i c e s
w i t h i n c r e a s e d c o l l e c t i o n s on d e b t s t o t h e A g r i c u l t u r a l Bank.

The s u p > o r t p r i c e Tor o l i v e o i l was increased by one t h i r d t o Dr 16.50

per kilogram, of which D r 7.50 i s t o be p z i d i r r e s p e c t i v e o f the producers'
indebtedness t o t h e A g r i c u l t u r a l Bank. As a r e s u l t of t h e h l g h e r support
p r i c e an& a d e c l i n e i n 'world market prices, Greek o l i v e o i l e x p o r t s c e a s e d
t o be competitive,

-6In addition to price support measures and premia, direct subsidies

a r e g r a n t e d t o f a c i l i t a t e and encourage the use of fertilizers, especially
n i t r o g e n and p o t a s s i u m f e r t i l i z e r s .
C.

I n d u s t r i apl r o d u c t i o n

(i) Manufacturing

The output of Greek manufacturing consists mostly of

censumerand
c a p i t a l goodsproduced for thedomesticmarket.
However t h e l a r g e r p a r t
in producticn and nearly all means of
of the machinery and equipment used
The f i v e l a r g e s t i n d u s t r i e s ( b y
number of employed
transportareimported.
and Ret21 products.
persons) are t e x t i l e s , c h e m i c a l s , t o k a c c o , f o o d s t u f f s ,
1960 than i n 1959 and t h e
I n d u s t r i a l p r o d u c t i o n was 8 p e r c e n t h i g h e r i n
r i s e was 6 p e r c e n t i n 1961; t h e l a r g e s t i n c r e a s e s o c c u r r e d
f o r nachinery
1960 and
and building materials. The output i n metallurgy stagnated in
d e c l i n e d i n 1961 ( s e e Table 5).
The five-yea:rdevelopmentprogram
aims a t an a n n u a l r a t e o f i n c r e a s e
betveen 6-8 p e r c e n t f o r most branches, 12 p e r c e n t for chemicals and metal
processing, and 14 p e r cent for metallurgy, The projects under construction
o r recently completed in accordance
w i t h t h e o b j e c t i v e s of t h e development
plan include an
a:luminum p l a n t , t h r e e s u g a r r e f i n e r i e s , a n i r o n
and s t e e l
m i l l , a cement f a c t o r y , a p l a s t i c endpetrochemicalfactory,
two phosphete
f e r t i l i z e r p l a n t s , a n i t r o g e n f e r t i l i z e r p l a n t , a voodpulp fzctory, as r . ~ e l l
as i n s t a l l a t i o n s f o r %he preparation of fruit and vegetable preserves and
of f r u i t j u i c e s .

(ii) Mining and pcwer

Greece possesses varied mineral resources, the most important

beiq
l i g n i t e andbauxite.
Lignite p r o d u c t i o n i n 1960, sane 2.5 m i l l i o n m e t r i c
bans, was 64 p e r c e n t Zbove 1959 and lO9 p e r c e n t above 1958. No data a r e
:?resentlyavailabj-efor 1961. m e five-yeardevelopmentprogram
callsfor
an extension of the Ptolernais l i g n i t e mine, as well as the e x p l o i t a t i o n of
thelignite-bearingarea
of Megaloplis. Electric
power p r o d u c t i o n a l s o
i n c r e a s e d r a p i d l y o v e r t h e l a s t few years, reaching 2.2 b i l l i o n kwh i n 1560,
some 15 per cent above
1959. I n 1961 e l e c t r i c i t y g e n e r a t i o n r o s e by 13 per
cent. With t h e development of new i n d u s t r i e s and$he extension of t h e d i s t r i b u t i o n s y s t e m t o new a r e a s , t h e demand f o r e l e c t r i c i t y i s expected t o
grow considerably. All e l e c t r i c power g e n e r c t i o n a n d d i s t r t b u t i o n
is carried
out by the Government-owned Public Power Corpomtion.

(iii) Shlppingandtourism

The Greek merchant lrarine

i s an important contributor
t o the oational
The tonna.ge r e g i s t e r e d u n d e r t h e Greek f l a g consisted of 1,165 s h i p s
of 6.4 m i l l i o n gross tons a t t h e end of 1961, tbmemillion tons more t'm n a t
the endof .1959. Tne s h i p s r e g i s t e r e d u n d e r
the Greek f l a g a r e t h e sixth
l a r g e s t merchantmarine i n t h e world. It i s reported t h a t Greek c i t i z e n s
hold o r c o n t r o l a n o t h e r 7.8 million gross tons of ships under foreign flags.
income.

PART I1

- 7 Table

5.

IndustrialProduction

(1939

= 100)

1959
1960
Average
Average
Average
24anufacturing
Metailurgy
iqachinery
Building materials
Textiles
Foodstuffs
Chemicals
Leather
Paper

Clothing
I;'ocd

1961 centPer

Change
+ 6.2
-20.7
J-

-:-

8.6
+ 4.0
+ 8.6
+x5-3

187

206

159

+ 1.2

287

9.9

3.9

+ 4.0

Cigarettes
Electrical appliances
Electricity

9.2

+11 1

+ 8.2

637

733

831.

+13.4
"_F_

Eource: Bank of Greece, Monthly S t a t i s t i c a l B u l l e t i n and To V i m a , AthenL.,

i.hrch 4, 1962.
!The s u b s t a n t i a l t r a n s f e r of s h i p s r e g i s t e r e d under "flags of convenience'' -to
the Greek flag i n 1960 and 1961 were f a c i l i t a t e d b y s p e c i a l measures taken

b y t h e Greek Government and t h e r e s t o r a t i o n o f i n t e r n a l monetary and p o l i t i cal s t a b i l i t y . Measurestakenbythe

Government t o induceshipowners t o
change t h e s h i p s ' r e g i s t r y
t o t h e Greek flag included:
(a) taxprivileges,
zmg., assessment of income of f r e i g h t e r s on the b a s i s o f g r o s s r e c e i p t s
frm
Zreights a t f i x e d low uniform rates, depending on t h e form of c h a r t e r , and
on t h e basis of tonnage i n t h e c a s e of passengerships.Furthermore,
all
s h i p s less than seven years old
are completely exempt from taxation, and all
newly-registered ships are tax-exempt f o r c e r t a i n i n i t i a l p e r i o d s u n d e r
certair conditions, ( b ) free sale and mortgage of vessels, (c) free dispocal
o f t h e f o r e i g n exchangeproceedsof
s a l e s and of insurance compensation of
vessels, (d) f r e e d i s p o s a l o f f r e i g h t e a r n i n g s , ( e ) r e d u c t i o n s
of contribut i o n s p a y a b l e to the Veterans Seamen's Fund, and ( f ) p r e f e r e n t i a l c r e d i t
terms.. To some extentthechange-over
was forced upon the shipowners by
boycotts o f s h i p s under "flags of convenience'' by
the International Transport
Vorkers Federation.
The five-year plan envisages
a s u b s t a n t i a l increase i n and modernizat i o n of the tonnage of Greek registered ships,
the f u r t h e r development of
coastal, Mediterranean and ocean shipping, and
improvement of Greek t e l e communications,anddevelopment
of t h e p o r t of Pireaus into an i n t e r n a t i o n a l
shipping center.

- 8 -

Tfie t o u r i s t i n d u s t r y a l s o expanded r a p i d l y i n r e c e n t y e a r s . T r a v e l
f a c i l i t i e s w i t h i n G r e e c e were developed, and hotel acccmmodaticn and other
t o u r i s t f c c i l i t i e s wereenlargedandmodernized.
Some 4C0,COO t o u r i s t s
visitel! Greece in 1960, (18 per cent more than i n 1359) and scme 500,COO
i n 1961. The a v e r a g e s t a y o f f o r e i g n t o u r i s t s i n t h e c o u n t r y
was e s t h z t e d
at about ten days.
The a v e r a g e e x p e n d i t u r e p e r t o u r i s t
was $129 i n 1960
$136 i n 1.961.The
five-year plan aims a t an
and it r o s e t o a n e s t i m a t e d
18 per cent annual increase
i n t h e number of t o u r i s t s ; accommodationsand
I n 1962 t h e Government p l a n s t o spend
t o u r i s t s e r v i c e s .will beexpanded.
D r 225 m i l l i o n on completing works already under way, and on new h o t e l s
andothertouristfacilities.This
amount does not include the cost of
t h r e e new c a r f e r r i e s ( D r 340 m i l l i o n ) which a r e b e i n g b u i l t i n I t a l y and
p a i d o u t of t h e b a l a n c e o f t h e I t a l i a n
war r e p a r a t i o n s . I n a d d i t i o n t o t h e
p r o j e c t s i n c l u d e d i n t h e Government'sprogram p u b l i c c o r p o r a t i o n s , p r i v a t e
Greek business a n d f o r e i g n c o n c e r n s a r e i n v e s t i n g s u b s t a n t i a l c a p i t a l i n
t o u r i s t f a c i l i t i e s i n Greece.Over60
h o t e l s , w i t h a t o t a l c a p a c i t y of
8,000 beds and costing
some D r 800 m i l l i o n , a r e p r e s e n t l y u n d e r c o n s t r u c t i o n .
(In August 1561 Greecehad some 1,900 h o t e l s w i t h 57,CCO beds,. s e e a l s o
Appendix, Table 10. )
a. P r i c e s a!ld wages
After a period of r e l a t i v e p r i c e s t a b i l i t y d u r i n g 1958 and 19.59, p r i c e s
moved upward during 1960 and u n t i l t h e end of t h e first q u a r t e r o f 1961
when t h e y s t a r t e d t o decline. This price
movementwas l a r g e l y t h e r e s d l t
.of changes i n the p r i c e s of o l i v e o i l , p o t a t o e s , r i c e
and dairy products
1960, r e s t r i c t i v e i m p o r t r e g u l a t i o n s , a n d
caused by the poor harvest in
a b o l i t i o n of p r i c e c o n t r o l s f o r d a i r y p r o d u c t s . I n o r d e r t o c o u n t e r a c t
t h e p r i c e i n c r e a s e s t h e Government i n c r e a s e d i m p o r t s o f o l i v e o i l a n d r i c e .
The wholesale price index f o r December 1960 stood 6 .o p e r c e n t above
December 1959, but i n December 1961 it was 3.7 per cent lower than in
was 2.3 p e r c e n t h i g h e r in 1960
December 1960. On the average, the index
t h a n i n 1959 and t h e r e was an increase of 1.5 per cent between 1960 and
1961. The consumer p r i c e i n d e x f o r December 1960 was 3.3 p e r c e n t above
December 1959 but during 1961 it declined and by December 1961 it had
f a l l e n by 0.7 per cent.
Between 1959 and 1960, t h e r e was an average inc r e a s e i n consumer p r i c e s of 1.6 p e r c e n t End of 1.8 per cent between
1960 and 1961.

The Government i s p r e s e n t l y s t u d y i n g t h e i n t r o d u c t i o n
of procedures
t h a t w i l l y i e l d r e l i a b l e statistics on employment,unemployment andwages.
So far, no adequateinformationinavailable.
Unemployment andespecially
underemployment i n t h e mountain a r e a s and t h e i s l a n d s c o n s t i t u t e s a s e r i o u s
problem. In 1960 and 1961 wage l n c r e a s e s i n i n d u s t r y were of t h e o r d e r of
4-5 per c e n t . S a l a r i e s of governmentemployeeswere
raisedinbothyears.
In 1961, the range of the increase
was 6 I 2 p e r c e n t , t h e h i g h e r p e r The i n c r e a s e s w e r e e f f e c t e d i n
centageapplying t o lower salary groups.
severalinstallmen.ts

-9-

Table

6.

Price DeveloFments

\ h o l e s a l e P r i c e Index
(Athens-Piraeus )

1952 =

100

Consumer P r i c e Index

(16 cities )

June 1959 = 100

150.2
153* 7
156.1
1959 December
15360 Parch

June
S ept emb e r
Deceaber

1961 hiarch

June
September
December

149* 7
151.1
152.1

155-6
158.8
159.5

1.55 5

153=6
153.o

101e 3
100.9
102 1
102.8

104.7

1.0

TA.E:T I1

Development program

2.

The Greekf!.ve-yeardevelopment
program covers the years 1960 t o 1964.
of e s t i m a t e s f o r aten-yearperiod.
It l a y s
do>m t h ed i r e c t i o na n dd e f i n e st h e
aims andmethods of development. The
b a s i c o b j e c t i v e s of t h e program a r e t o i n c r e a s e p e r c a p i t a income and
employinent, and t o reduce both Greekdependency on f o r e i g n f i n a n c i n g and
the provinces. National
income
t h e d i s p a r i t y of inccmebetweenAthensand
i s t o i n c r e a s e a t an annual average rate
of 6 p e r c e n t , r e s u l t i n g
i n a 30
p e r c e n t r i s e i n p e r c a p i t a incomeby t h e end of t h e f i v e - y e a r p e r i o d
(population increase 0.8 p e r c e n t p e r
annum)
m e average annual rates
of
growthofinvestmentandconsumption
a r e s e t a t 10 per cent and 5 per cent
of t h e Greek
r e s p e c t i v e l y . To a c h i e v et h e s eo b j e c t i v e s ,t h es t r u c t u r e
economy i s t o be changed toward increased output
of high-yielding
agricultural products at internationally competitive prices,
t h e processing
i n Greece of domestic raw m a t e r i a l s (e.&., establishment ofaluminum and
i r o n and s t e e l i n d u s t r i e s ) a n & a n i n c r e a s e i n s e r v i c e s r e n d e r e d t o f o r e i @ n e r ;
( e s p e c i a l l y i n shipping and tourism).
A major effort will be made by t h e
Government t o rai.se the standards
of education and t e c h n i c a l t r a i n i n g .

It w%*sdrawn up on t h e b a s i s

The plan provides a basLcframework f o r p r i v a t e and p u b l i c e f f o r t s .

The l a r g e r p a r t of t h e t a s k t o promoteeconomic p r o g r e s s i s p l e c e d i n t h e
hands of p r i v a t e i n i t i a t i v e :
of a t o t a l investmentexpenditure of
D r 110 b i l l i o n , D r 7 1 b i l l i o n a r e t o 3 e c a r r i e d o u t by p r i v a t e i n v e s t o r s .
Public sector investments
amounti-ng t o I
k 39 b i l l i o n will bemainly f o r
i n f r a s t r u c t u r e works and f o r i n v e s t m e n t s n o t a t t r a c t i v e t o p r i v a t e c a p i t e l .
Some D r 92 b i l l i o n , or 84 per cent of t o t a l investment expenditures are
expected t o come from domestic sources and
D r 18 b i l l i o n , or 16 per c e n t ,
me expected t o befinancedfromabroad.
The Government i n t e n d s t o pursue
p o l i c i e s c o n d u c i v e t o anexpansion of private investment and t o d i r e c t and
induce private investment through appropriate tax incentives, and the
i n t h i sr e g a r da r ed i s c u s s e d
p r o v i s i o n of lonptermfinancing.Stepstaken
on p 11 below.
A l i c e n s e from t h eM i n i s t r y of Industqy i s required
f o r theestablishmentandoperation
ofan
e n t e r p r i s e i n Greece.These
of t h e development
l i c e n s e s are i s s u e d i n accordance with the objectives
program.

Curing the f i r s t two years of t!le implementation of t h e p l a n , p r i v a t e

investments were 23 per cent and public investments 14 per cent lower than
This i n i t s e l f doesnotindicate,
the planned annue.1 a v e r a g e t a r g e t .
however, t o what extent the planned objectives
will be reached, since the
f i r s t y e a r s of tke planning period were d e v o t e d l a r g e l y t o p r e p a r a t o r y

work.

- 11 Table

7.

Five Year Plan:PlannedandRealized

Investments

Fixed!

F r i vPautT
beloitca l

( I n b i l l i o n s of d r n c h m s , a t 1959 p r i c e s )
Planned investment
Realized investlnent
E:pected investnent

1960-64
1950-61
1962-64

71

110

39
1.3

22

49

35
75

20

( I n per cent)

Source:

Infornationsupplied

by t h e Greek a u t h o r i t i e s .

Specific measures ixtrocuced by t h e Government t o f a c i l i t a t e and

d i r e c t economic development sre described belov.
1x:ciustrirzl firms that undertake
new productive investment i n
Greecebetween t t e end of 1959 and t h e end of 1964 a r e e n t i t l e d t o deduct
suck oxpenditures From tw&ble income (Law No. 4002 of 1959) Hcwever,
f a r e n t e r p r i s e s i n t.he Athens-Pireaus region, the mcunt that
may be
deiixteci i n any one y e a r m ~ y n o t exceed. 50 per cent of n e t t e x s b l e p r o f i t
(hisher percentagesareallowed
for theprovinces)
The deducted
amount rnlst be kept i n a s p e c i a l reserve a c c a m t , b u t i t becanes taxzkle
i f d i s t r i b u t e d cr withdrawn. Law No. 4C02 alsoreduces stamp dutieson
incorporation documentsand s h a r ei s s u e s .
Greek f i r m s t h a t export
dcmes-bic farm, mining acd nariufactured and handicraft prcducts
may
Ceduct 1 percent of eqort r e c e i p t s from t a x a b l e income. Thisapplies
also to r e c e l p t s of shipyards and machine shops for r e p x i r s of foreizn
siiil;s and a11 miningfirms.
A 50 per cent increase
of depreciation
allowmce was granted by L w J!To. 3765 of 1957 t o new p l a n t s and new
equipment.

- 12 of 1599 and t h e end. of 1964, Law Ro. 4002 of 1959 provides f o r

t a x - f r e e r e s e r v e s cf 60 per cent of tpaxable p r o f i t s (90 per cent
f o rt h ei s l a n d s ) .
'However, no c u r r d a t i v e use of t h e s e two concessions
5s permitted. Provincial
. firms further enjoy lower turnover taxes,
hiGher depreciatfon allowances a n d l a g e r exemptions from other
duties
t h a n -firms i n t h e Athens-Pireaus region.
In order to

encquraGe t h e creat;ion of l a r g e r e n t e r p r i s e s

which

nay be b e t t e r a b l e to produce a t internationalljr competitive prices

a nurtiber of p r o v l s i o n s t o r e d u c e qr t o exempt from t a x a t i o n a e r g e r s
corporations and t h e i n c o r p o r a t i o n
enacted.

of

of personal enterprises hava been

L ~ No.
T 4171 oi' Nay 1961 provided additionel inducements
to
GreekandPoi-eign
entrepreneurs t o i n v e s t i n new p r o d u c t i v ee n t e r p r i s e s
the value of 3r 90 milli.on ($3 million),
provided such invest,mects exceed
a n d t o existingen-Lerprises
pmvicled t h a t t h e value r;f theexpansion
o r nodernization will be more than D r 30 million, and t h a t t h e v a l u e
of plant and equipmentof the e n t e r p r i s e a f t e r tl-Le investment w i l l
exceed Dr 90 million. Under t h e s e c o n d i t i o n s , t h e
law p r m i d e s Tor
duty-free import of equipment and of most c o n s t r u c t i o n m t e r i a l s ; t h e
r i z h t t o accumulate, for zt l e a s t f i v e y e a r s , t a x - f r e e r e s e r v e s
up t o
t h z amount of the ori,zinal investment i n f i x e d c a p i t a l and t h e s e
reserges are i n a d d i t i o n t o t i l e d e p r e c i a t i o n
reserves; exenption frcm
o r considerable reduction of v a r i o u s l o c a l taxes; "freezinC;" of
corporate tz;r rates u n t i l t h e long-term loans of t h e e n t e r p r i s e are
r e p a i d , i . e . , up t!, 15 y e a r s from the beginning of operetions; assurance
t h a t d u r i n g t h e same p e r i o d no t a x e s vi11 be imposed on c a p i t a l ;
"freezinG" f o r 15 years frora the beginning qf operations, of all dues,
coatri'cu-Lions, etc.,payable
t o municipal a u t h o r i t i e s , a n 2 scme o t h e r
~ u b l i cbodies; for 5 years no income t w e s w i l l 'ce Levied on the earnings ~f
non-Greek personnel employed by e n t e r p r i s e s i n v e s t i n g u n d e r t h e p r o v i s i o n s
Q? t h i s law. Provisi.onsrelatingonlytoinvestment
by f o r e i g n e r s a r e
discussed on below.
I n the credit sphere, provisions
t o promote p r i v a t e i n v s s t m e n t
irlclude t h e o b l i g a t i o n f o r t h e t h r e e l a r g e s t c o m e r c i a l b a c k s
t o use
15 2er cent of t h e i r d q x j s i t s to g r a n t s p e c i f i e d c a t e g o r i e s of medimand long-termcredit f o r development purposes. Fubliz s e c t o r
largest
investments are f a c i l i t a t e d by t h e - p r o v i s i o n t h a t t h e t h r e e
c c m e r c i a l bankshave t o i n v e s t 18 p e r cent of t h e i r &-posits in Treasury
bllls, t.heproceeds of which h e l p t o f i n a n c e t13.e public investmect
program; f w t h e o t h e r commercialbanks, t h e r a t i o i s 9 p e r c e n t .

13 March 1962, t h c Government mnounced further measures

to
i x i 1 i t a i . e n n d speed up econcmic development, avld tr, a d j u s t t h e
econcmy to the r s s c c i s t i o n w i t h t h e European Economic C o m m i t y . Some
oi' these measures r e l a t e t o a d n i n i s t r a t i v e r e f o r m for quicker and
e a s i e r apx-oval of planned private investments,
tlre establishment
of i I % T J firms, or tllelnercer of exlstinGones.Other
measures concern
the prcmotion of exports and are discussed on page 27 below.

I n February 1960, $he I n d u s t r i a l Devalopmegt Corporation ( I D C )

m . z e s t a b l i s h e d t o pwmoteindustrialdevzlopr-ent i n Greece. The
a c t i v i t i e s GI" t h e I D C include (a) the sett5r;g up--with
o r vithout t h e
c x p e r a t i o n of' other bodies-- of new i n d u s t r i a l or m i n i n z coapanies,
t h e s h a r e s of which may be s o l d subsequently t o t h e p u b l i c ; (b) p a r t i c i pt';tion -in the expnsiol.1 of exist in^ i n d u s t r i a l or m i n e r a l e n t e r p r i s e s ;
and ( c ) g r a n t l n z or" tec!.niczl a s s i s t n n c e to suchenterprises.
The IDC
i s not aGthorizeC t o 1el;d I t s rescurces; L t can ocly p s z t i c i p a t e by
3cquS.x.icg e q u i t y cG?ital in Rev o r e x i s t i n g e n t e r p r i s e s .
I t hac, R
c h r e c z g i t a l of D r 1,2CC m i l l i o n , t o b e p a i d i n four annual i n s t a l l rn2nts; ol t h i s c a p i t 2 1 , the Goverrmentsu5scribc=d D r 540 ? a i l l i o n
cmmecial b a n k s G r 408 m i l l i o n , tke Consignation and Loan Fund- 1.7
D r 2kC million, and p r i v a t e i n d i v i d u a l s Dr 1 2 m i l l i o n . The resources
af the Corporztion may br; sup2lernented by t h e s a l e of bonds o h t h e c a p i t a l
Jaxkt.
Ir. 1960 and 1961, t h e ICC carriedcutresearchconcerninz
t h e zstzbl_Lshment oP verioutsbasicInciustries,
in p a r t i c u l n r n i n e r a l .
and m e t a l i n 5 J s t r i e s .
e x p l o i t a t i o n . It also s t u C i e d t h e l e a t h e r , t e x t i l e
The s t u d i e s 09 t h e IDC are ma6e a v a i l a b l e t o i n t e r e s t e d dcmcstic.and
f"ore-iGn i n ~ e ~ t ~ rThe
s . ICC p G r t i c i p a t e d i n theestahlishment of two
b&d,~triz
ventures
l
-Lo t h e e x t e n t of 12 p e r c s n t of thr3 s h a r e c s p i t a l
(31.- 90 m i l l i o n f o r "Greek f i h m i n u m i n i h s t r y " and Dr rc.5 m i l l i o n for
t~c
T i r m "I3uilC;iilp X,.;terials, s .A.") a n d financed e n t i r e l y t h e c a p i t a l
of z corpora,tlon e n ~ ~ g ei nd marble processing ("Hellenic T4arSle
Corporztion")
It also p a r t i c i p a t c b I n theestablishmect oi' che "Greek
Iron and 3 t e e l Corporation".

The EconcmicDevelopment FinancineGrcanization (EDFO) established

a n agreementbetveentheGreekGovernxznt,
tile
x ofk Greece 2nd t h e U n i t e d S t a t e s Q e r a t i o n a l i 4 i s s i o n t o G r e e c e t o

n
I 1954, was f m n d e d by
n

4'

~ p Consignation
~ e
r n 2 Loan Fund a b i n i n t e r s t r u s t s , e s t a t e s ana
sirailar fi2nd.s subject io supezvf-sion of t h e c o u r t s of t h e c a m t r y .
It e q l o y s theze funds by i n v e s t i n s I n re;a1 e s t a t e , and Sy p z n t i n g
I-oaas t o p u b l i c a r p o r a t i o n s and p u b l i c u t i l i t i e s .

- 1,4an2 3 t i i ; : i i s t e r a FEor'ifolio of loans ma& from c ~ u n - t e ~ : p a r t

1948 and 1954. The Z i F O
was ex:.tuusted also t a g r m t new meeum- and long-term loans
and. t o
p a r t i c i p a t e i n t h s c a p i t a l of private productive enterprises from
repaymentsand
i n t e r e s t c o l l e c t i o n s on t h e o r i g i n a l loans, as well
as frcm new counterpartfund releases of U.S. aid.There
was DO
"
sLcourse
a
tc, ciomestic borrow-ing. Contrzry -to t h e I D C , t h e EDFO may n o t
s e t up new e n t e r p r i s e s . I.oans approved by EDFO i n 1961 were t w i c e t h e
rniQu3-tapproved 'i:~
1960 ( see ,Table 8).
tal:c

C-J~Y

f u 5 s i n izracilmas of t h e U.S. a i d between

T&le 8.
LoansApproved
by t h e EconomTc Cevelopment
FinancinG Orgznization i n 1960 an2 196r

...
....

..

Industry
Tourism
Tmrist transport
Other
Total
"

Source:Informationsupplied

1960

1961

_
I
-

4.1
3.5

12.3

3"4

1.1
0.2

0.5

0.2

8.3

17.0

bjr the Greek authorities.

Since the beginning of its operation i n 1954 u n t i l t h e end of 1961,

tile ZDFO has granted loans t o t a l i n g $31 million. O f t h e s e l o a n s , 60 per
cegt vas grented t o T
l7 imhstrizl and xinning enterprise?, and
25 per c e n t t o 72 todrist h o t e l s 2nd 18 t c x r i s t v e s s e l s and ferries, t h e
r m a f n i n g 15 p e r cent wes used or various other important purposes.

- 15 -

Table

16

9. ibney Supply and Quasi-Money

la59
Dec .
Money snpply

Pi.T I1

13,050

Bard< notes and coins i n circulztion

Dsposit mcney

6,8c3

4,&7

e n t e q r i s e s w i t h cormerela1 banks
and s p e c i a l f i a a n z i n g i n e t i t v - t i o n s
Savings
8,543
TSme
1,273

196~
Dec .

1961.
Dec.

17 -

( In drachxas )
"

18

Tm2ble11. FactorsAffecting

Money Supply

( I n m i l l i o n s of drachmas )

A.

2,226

1. Central Government-2/

1,777

1,377

-1 02

- a.;

-859

275

534

356

2, P u b l i ec n t i t i e s
j.

B.

P u b l i ec n t e r p r i s e s

Counterpart funds-3/

- 144
1,124

1. Releasesandtransfers

Accumulation
2.
C.

874

Public Sector

-1,266

447

PrivateSector
1. C r e d i t s
2.

Securlties

3.

Savings,time
deposits

3,058

165
arrd blocked

- 3,247

- 2,489

D. Foreigrr Sector
1. Foreign
exchangeholdings

2.

Clearing
accounts

E.

O%her

F.

Change in money supply

Source;

Bank ofGreece,

- 236

i k n t h l yS t a t i s t i c e l "
.
-Btdlet.ir., W t ~ h 1962.

19

PM7T I1

in 1361 17a.s t h e ShaiT i n c r e a s e ir, d e p o s i t s of t h e public e n t i t i e s , e x p e c i a l l ? :

t h e s o c i a l secQrit3-system.
The e q m x i o n a r y e f f e c t of t h e c e n t r a l Governzest m s n~clSnly conr;ecteu Yrith tke financin;;

of investment.

I n l36G and l S 6 i the net accumulation of counterpart funds deposited

w i t h t h e C e n t r a l &n!;
ammnteti t o D.r 144 million and D'r 351 m i l l i o n , r e s p e c t i v e ly.

20

Tzble 12. ConsolidatedBalanceSheet

PART I1

of t h e Monetary System

( I n rni1lto:ls of &achmas )

1959

Dec.
Asse-ks
Gold a n d f o r e i g n exchange
Claim on Government

Claims on p u b l i c : e n t i t i e s a n d
publicenterpri.ses
Claims on p i v a t m e s e c t o r
F i x e d assets
Other assets
L i a b i l i t i e s( n o n - m o n e t a r y )
Fcireign exchange
I
Private 6eposits J
Public entities deposits
International organizations
deposits
Governmect l i a b i l i t i e s i n
drachnas
U.S. a i d drachma eccounts
C&pit,al and rese::-ves
Other 1ia.bilitie;;
Money supply

Scurce: B a n k ofGreece,Monthly
March 1962.
1/ Savings,timeandblocked.

1960
Nov .
Dec.

1961

Mov

53 (955
9

7,268
12,827
1,913

26,883
1,224

3,740

39,262

679
13,253

4,460
1,434

3,503
4,501
4,743
6,19
14,593
Statisticel Bulletin, February

1961 and

21

PAR? IT

LaLile 13. Consolidated Ba,lance S l e e t of Cori-mercial Sa&s

m - -

( I n mill ions -nf

. ?t-arhmns )

11.959
Dec.

. ""

Nov

.1960

Dec.

1961

Nov ,

Assets
Cash

Deposits w i t h Bank of Greece

Foreign exchange
Treasury b i l l s
Zrests
Secwcif,Les
FtxeL a s s e t s
Other. a s s e t s

T o t a l assets = t o t a l l i a b i l i t i e s
Llzbilities

S i g h td e p o s i t s
Savings d e p o s i t s
'Time d e p o s i t s
Sloclied d e p o s i t s
Funds from EaL& of Greece
F'unlis f r o 3 Economic C e v e l o p e n t
Financing Grganlzation
(Cnpitelan6 r e s e r v e s
Other l i a - a i l i t i e s
I
_

Scui*ce: Bank of Greece, Monthly S t a t i s t i c a l B u l l e t i n , F e b r u a r y

Narch

1962.

1961 and

- 22 -

A.

PART I1

Bank o f Greecefunds

10 Loans g r a n t e d d i r e c t l y by t h e

Bank of Greece
Pllblic Power Corp.
Currant Gorpo and Sultanas
Cooperatives
0t h e r

.
I

0 .

.o

0 .

0 .

55.7

2. Through commercial barlks

...

30 Through Agricultural Bank

so Ihro;lgho r goat hc iezra t i o n s

2,04.0.7

2,202.2

(970.7)

(853.5)

(361.2)
(708.8)

(57969)
(768.3)

152.0

u9*9

5,368.

5,622c1

13.2

1k. 6

0 . .

Through c o m e r c i a 1 banks
Through A g r i c u l - t u r d Eank
Through Mortgage Bank

Source:

Data supplied by the Greek a u t h o r i t i e s (Bsnk of Greece)

Table 11s.

Sources of Financing of A g r i c u l t u r a l Bark Loans

( I n m i l l i o n s of drach;nas)

Dee. 1960

1959

Total

Total
Per
cent

Bank of Greece funds

Fublicentitiesfunds
Goverrment funds
EDFO funds
P o s t Office savings fund:;
Gwn fxnds
Total
Source:

-1/

70

5,877,
2 89=/

3
9

721

123
150
1,180
_
I
_

83 340

1
2

14
100

5,369
333
800

82
230

1,751

8,565

Dee. 1961
PercentTotal
Fer cent

63

9
1

5,622

622

50

20

2C6
2,067

1CO

9,657

58
11
6

1,090

22
-

1CO

Data supplied by t h e Greek a u t h o r i t i e s (Bank of Greece).

Public entitiies, plus other i.nstitut,ions

such. a s National 1Iortgage Bank.

23

?ART I1

Tabl-? l6* Total C1-edj-t @utsta.ndFng t o non-Governmnt,

by Sources and Sectors
( h m i l l i o n s of drachmas)

Changes

1959 19611960
A.

11,028
1 2 851
3,173
1,983

SankofGreece
C1ommercial banks

EDFO

A g r i c u l t u y d sank
Other f i n a n c i n g i n s t i t , u tions

I/

1960

1,363

Gther fcEds 2/

dgriculture
Hanuf a c t u r i ng
Trade
Othw p r i v a t e
Public: e n t e r p r i s e s and
entities

Sourile:

1/
-

2,268
23
229
529
-110

4,229

3 742
J

547
1,702

436
778

3; 847
2,373
2,251

Bark o f Greece, iVIonthly S t a t i s t i c a l B u l l e t i n ,

MortgageSank,

1,080

23473
930

892

Total credit
3.

19Z

"

848
March 1962.

Consignationsand Loans F u d , P o s t O f f i c e through A g r i c u l t u r a l I3mk and Portgage

2/ F u b l i c e n t i t i e s f i r n u s g r a n t e d
~ a i i kfor 1o.ng-term purposes.

785

24

FART 11

The A g r i c u l t u r a l Eank o b t a i n s t h e major share of i t s funds from t h e

Bank ofGreece.
I n t h e l a s t two years, however, progress was a c h i e v e di n
of Bank ofGreecefunds
i n t o t a l r e s o u r c e s of
reducing the relative share
t h e A g r i c u l t u r a l Bank from 70 p e r c e n t i n 1959 t o 63 p e r c e n t i n 1960 and
58 F e r c e n t i n 1961. The share of t h e A g r i c u l t u r a l Bank' s o m fundsrose
from 14 p e r c e n t i n 1959 t o 20 p e r c e n t i n 1960and 21 p e r c e n t i n 1961.
P u b l i c e n t i t i e s havebeeninduced
by t h e monetary c u t h o r i t i e s t o make a v a i l a b l e
t o t h e A g r i c u l t u r a l Bank a l a r g e r p a r t o f t h e i r f u ~ d s . The p u b l i c e n t i t i e s '
co-ntributions t o A g r i c u l t u r a l Bank loans increased by more t h a n t h r e e times
i n 1961 Trom 4 per cent of t h e Bank's t o t a l r e s o u r c e s i n 1960 t o 11 per cent
i n 1961.
The A g r i c u l t u r a l Eanlr's l o a n s t o t h e a g r i c u l t u r a l s e c t o r c a r r y i n
of 2 per cent.
aost ceses an interest rate
A t t h e endof 19'59, t h e commercialbanks were v e r y l i w i d . T h e i r f r e e
d e p o s i t s w i t h t h e Bank of Greece after deducting the obligatory deposits
a m u n t e d t o some 11 p e r c e n t o f t h e b a n k s ' t o t a l a s s e t s .
I n a d d i t i o n ,t h e
banks purchased Treasury
b i l l s w e l l i n e x c e s s of t h e conll;ulsory requirements.
I n 1960, t h e p r i v a t e s e c t o r ' s d e p o s i t s w i t h t h e
banks r o s e m c h less t h a n i n
1959, p a r t l y as a r e s u l t of increased offering of new long-termbonds.
A2
t h e same time, t h e c r e d i t e x p a n s i o n t o t h e p r i v a t e s e c t o r
was s u b s t a n t i a l l y
higher than i n 1959 but the banks were able t o f i n a n c e t h i s e x p a n s i o n w i t h
t h e i r own funds, and in a d d i t i o n t h e banks continued t o h.qj T r e a s u r y b i l l s .
However, t h e y r e d u c e d t h e i r d e p o s i t s
witn t h e Bank ofGreece.
(The banks
obtained a h i g h e r r e t u r n on t h e i r f u n d s by i n v e s t i n g i n T r e a s u r y b i l l s r a t h e r
t h a n i n d e p o s i t s w i t h t h e Bank of Greece.)

There was a sharp i n c r e a s e i n t h e c r e d i t e x p a n s i o n s t a r t i n g i n

t h e second
h a l f of--1960, andon Marcil 1, 1951 the Currency. Cormittee imreased f r m LO t o
13 p e r c e n t t h e
amount Of t o t a l s i g h t and savings deposits
which t h e commercial
kanks m u s t h o l di nT r e a s u r yb i l l s .
The purpose of t h i s change WES t o prevent
t h e banks from u s i n g t h e i r e x c e s s h o l d i n g s
of T r e a s u r y b i l l s t o expand c r e d i t .
Tne i n c r e a s e i n t h e r e q u i r e m e n t t o h o l d T r e a s u r y
bills absorbed the total of
theexcessholdings.
I n 1961, t h e commercialbanks'
f r e ed e p o s i t sw i t ht h e
Bank of Greece again increased, but t h i s i n c r e a s e i n t h e i r d e p o s i t s
was only
t h e banks' indebtedness t o t h e Bank of
slightly higher than the increase in
Greece.Thisincreasedreliance
on Central Bank credit followed a period
their debt to the
Bank
s i n c e 1956 i n which t h e c o m e r c i a l bankshadreduced
ofGreece.

c.

C r e d i tt ot h e

Government

The banking systexn provided the Government with Dr 2,394 m i l l i o n i n nev

f i n d s i n 1960, a n i n c r e a s e of 21 p e r c e n t compared with 1959 (Dr 10,592
million, see Table
E,)e I n t h e first elevenEonthsof 1361 t h e e x t e n s i o n 02
new c r e d i t t o t h e Government was i n s i g n i f i c a n t , Dr 80 m i l l i o n , or less t h a n
1 per cent.
I n 1960 the purchase of T r e a s u r y b i l l s by t h e baLrking system amounted
t o D r 1,308 million which r a i s e d i t s holdings t o D r 2,711 million. This

25

PART IT

purchase rcyesented mainly

a s h i f t by t h e commercial banlls from. d e p o s i t s i n
t h e C e n t r a l Bank t o investments i n Treasuxy b i l l s , while i n 1959 t h e b a n k s '
purchases of T r e a s u r y b i l l s had t&en p l a c e at t h e same time as the banks
were adding t o t h e i r d e p o s i t s i n t h e ' J e n t r a l
Bani;. I n t h e first eleven months
of 1961 the tanking system's holdings
of Treasury b i l l s haveremained f a i r l y
s-table.

d.

Nonctaryand

c r e d i tp o l i c y

9mnetary policy i n Greece i s formzlated by t h e Currency Committee, cons i s t i n g of t h e Governor of t h e Bank o f Greeceand t h e M i n i s t e r s of CoordinatLon,Finance,Agriculture,IndustryandComerce.
This cornitteereviews
rrm7etary developments at monthly intervals i n t h e l i g h t of the general economic c?.evelopxer;ts

Greekmonetary

policy since the

second h a l f o f

i959 has

beer. c h a r a c t e r i z e d

k.y a gradual re1axai;ion of s p e c i a l c o n t r o l s onbank c r e d i t , w i t h t h e

aim of
t r a n s f e r r i n g the a u t h o r i t y of c o n t r o l t o t h e c o m e r c i a l banks i n o r d e r t o
s i q l i f y t h e c r e d i t nechanisrn. A s e r i e s of c o n i r o l s was abolished,including
the exkension of medium- and long-term restrictions
on t h e f i n a n c i n g of
export trade, and c e i l i n g s on c r e d i tg r a n t e dt oa r t i s a n s .
The r e n a i n i n g

c o n t r o l s , e s p e c i a l l y on domesticandimport'trade,
are c o n s i d e r e di n d i s pensable in order to direct. the largest possible part of loanable funds
to
p r c d u c t i v ei n x s t a e n t s .
Theamount
of creditextendedtodomestictrade
by t r a d e r s t o t h e c o n s m e r s and t h e r e f o r e t h e
letemines the credit granted
a u t n o r i x i e s c q n s i d e r it necessar.y t o a v o i d an e::cessive i n c r e a s e i n c r e d i t s ,
as cons1unpkion andimports w ~ u l 'be
l encouraged.

The main instruments

of c r e d i t c o n t r o l are:

( i ) D e t e r ~ n a t i o nof i n t e r e s t rates t o be charged by banks. A l l

i n t e r e s t r a t e s on d e p o s i t s which i n 1956 hadkeen raised sharply, i n o r d e r
t o encoxrage t h e r e t u r n of money t o the banks, have since
1957 been gradually
lowered i n v i e v of t h e r e % u r n e d c o n f i d e n c e i n t h e drachma,andlower
rates
hel2ed t o s t i m l a t e economic developnent.Detailsregardingthe;rarious
c h m g e s i n i n d i v i d u a l rates a r e g i v e n i n T a b l e
17. To encouragedeposits
witin t h e A g r i c u l t u r a l Bank and the Post Office, higher interest
rates t h a n i n
1960. From October 16,
o t h e r baniis were p a i d on s u c h d e p o s i t s s t a r t i n g w i t h
1961 tils irkerest rete f o r time d e p o s i t s was r a i s e d by 1/2 t o 1 percentage
p o i Q t , for 3 to 6 months' d e p o s i t s t h e i n t , e r e s t rate was increased from 5 t o
5 1 / 2 Zer cent and f o r 1 2 t o 24 months' d e p o s i t s from 5 1/2 t o 6 1/2 p e r
was made t o o f f e r s a v e r s more f a v o r a b l e terms ax3 encent.Thisincrease
coumge them t o t i l r n t o time d e p o s i t s i n s t e a d of s a v i n g s d e p o s i t s w i t h drawable on dmand.

The rediscoul?t r a t e of t h e Bank or' Greece ( i . e . , t h e rate a t which t h e

3ank of Greece may r e d i s c o u n t i n d u s t r i a l b i l l s ) whichhadbeenreduced
from
8 t o 7 per cer,t on A p r i l I., 1960, was further reduced t o 6 p e r c e n t i n November
1960. Contra1.y t o developnents i n e a r l i e r y e a r s , t h e b a n k s s t a r t e d t o r e d i s count again i n December 1960 and they continued t o use t h e s e f a c i l i t i e s i n 1961.

-25
Table

17.

PAR'; I1

I n t e r e sRt a t e s

( I n per cent)
I.

C e n t r a l Bank rediscount r a t e

11. D e p o s i t

1/

i n t e r e s t r a t e sJ
2
Sightd'zposits
Savingsaeposits
Time ae:?osit s

2g

4 - 5.5

5.5

111. Lending i n t e r e s tr a t e s
industry

to
h a n d i c r-a ft to
- t o exzport trade
tobacco
and trade
-to imprt trade
and
domestic
trede
a g r i c u l-t utroe
- fcr housing
constraction

Source:

9ank of' Greece,Monthly

5.5

6.5

3/

7.5

10

5.5
9

7
LO

S t a t i s t i c a i Bulle.cin: March

1962.

The Eank of G r e e c er e d i s c o u n t si n d u s t r i e l
b i l s only.
The reaiscolmt rate has been lowered gradually, from
11 per cerif; u n t i l March
1453 t o 10 p e r c e n t until September 1951, 3 per c e n t u n t i l March 1960,
end 7 percerituntilOctober
1960. On d i s c o u n to p e r a t i o n s( e x c e p tf o r
it rzpplies the same r a t e s as t n e
c r e d i t s ' t u agricultwre and housing),
otherbanks.Variouslowerratesarecharged
on advances t o c e r t a i n
banking institutions for various specified purposes, the
most s i g n i f i c a n t
i s the 1per cent rate applied
on f i n a n c i n g of A g r i c u l t u r a l Bank.
31 Lower r a t e s a p p l y t o d e p o s i t s of b m k s , p u b l i c u t i l i t y i n s t i t u t i o n s ,
p u b l i c e n t i t i e s , p e t r o l e m companies, nonresidents , e t c .
The s i g h t d e p o s i t i n t e r e s t r a t e
has been lowered gradually frcrs
10 p e r c e n t u n t i l Mizrch 1951 to 3 p e r c e n t u n t i l F e b r u a r y
1960 and 2.5
p e r c e n t u n t i l C c t o b e - 1960.
Savings depos:it rates were
5 - 6.5 per cent until Februzry 1960 and
4.5 - 5.5 percentuntilOctober
1960. The h i g h e rr a t ea p p l i e s t o & p o s i t s
under Dr 100,000. The p r e s e n t rates a r e 4 percent on d e p o s i t s Over
3r 100,000, 4.5 Fercent
on otherdepositswithcomercia1banks,
4.75
p a - c e n t on d e p o s i t s w i t h A g r i c u l t u r a l
Bank,
5 percent on d e p s i t s 741th
F s s t Office, 5.5 percent on d z p o s i t ss u b j e c tt o
3 morlths' n o t i c e .

A/

Table18.

AdditionalSeasonalReserveRequirements

( I n per cent

of sight and sa-rings deposits)

"
P

December
Jarxary
February
Source:

1.95gj60

1960/61

1961162

10
12

10

4
5
8

" .

14

LO

12

Informationsupplied by t h e Greek a u t h o r i t i e s .

27

PART I1

I n A p r i l 1962, t h e C u r e n c y Col.ilmlttee announced p r e f e r e n t i a l c r e d i t t,erms

f o r i n d u s t r i a l and h a n a c r a f t firm t h a t succeed i n e x p o r t i n g a determined,and
i n future y e a r s i n c r e a s i n g , p a r t
of t o t a l sales a g a i n s t c o n v e r t i b l e f o r e i g n
amount of t h e i r
exchange. Such firms may o b t a i n bankadvances up t o t w i c e t h e
own s h a r e c a p i t a l and r e s e r v e s , a t 4 p e r c e n t i n t e r e s t , p l u s
1 per cent complus
mission. The r e g u l a r c o s t of c r e d i t t o e x p o r t i n g firms i s 6 percent,
1 per cent commission, e x c e p t f o r e x p o r t firms whose borrowingfrombanksdoes
not esceed t h e i r c a p i t a l a n d r e s e r v e s q u a l i f y f o r
a 5 per cent rate, plus
l
percent commission.

" h e Currency Committee a l s o announced e a s i e r t e r m s f o r l o n g - t e r m c r e d i t

t o irxiustrid, h a n d i c r a f t andmining f i r n s t o f i n a n c e f i x e d i n v e s t m e n t s
and
t o p:rcvide a d d l t i o n a l working c a p i t a l . C r e d i t
may begranted up t o 70 p e r
cerlt of e x p e n d i t u r e s f o r p e r i c d s up t o 1C y e a r s a t a n i n t e r e s t r a t e o f
7 per
A r a t e of 6 p e r c e n t , p i u s 1 p e r c e n t
c w t , plus 1 Fer cent cormission.
carmission applies t s c r e d i t s t o f i r m s f o r n e d bymergers t h a t carr"J out
25 percenl;, 40 perceilt,and
60 p e r
modernization2roQects.Firmsexljorting
cent of total
sales qualify for mediumterm loans
a t a c o s t of 7 p e r c e n t ,
5 per cent, and 4 ye: c e n t , r e s p e c t i v e l y ( i n t e r e s t plus conmission).
I K t e r e s t r a t e s c h a r g e d by t h e Economi- DevelopnentFinanceCorporaticn
v i 1 1 be re,duced accordingly.

( i t ) C c m e r c i a l Sarlrs mustkeep a t l e a s t 8 per cent or" t h e i r p r i v a t e

s i g h t 2nd savings deposits wi-'ih t h e Bankof
Sreece.Curingthewinter
months
(December, Jznumy,February) when bank l i q u i d i t y i s seasonally hizh, additiona1 rzserverequirementsare
i n f o r c e .n e s ea d d i t i o n a lr e s e r v er e q u i r e m n t s
were Lowered i n t h e l a s t few years as may be seen from Table
18.
( i i L ) Inaddition t o therequirenentsdescribedunder
( i i )above,
corm.ercialbanks are obliged LG i n v e s t a c e r t a i n p e r c e n t a g e of theii. deposita
in Treasury b i l l s . The provis5ons in force s?'.nce?:!arch 1961 a r e as follows:
t'ne t h r e e l a r g e s t Greek b a r k s a r e r e q u i y e d t o i n v e s t
18 p e r s e n t of s i g h t
ai?? s a v i n g s d e p o s i t s i n T r e a s u r y b i l l s ( p r e v i o u s l y
io p e r c e n t ) . F o r t h e
o t h e r banlrs, t h e r a t i o i s 9 p e r c e n t .
While p r e v i o u s t o March 1, 1961 t h e
balilrs ' holdings of Treasury b i l l s exceeded the compulsory requirement, since
then, however, the holdings are only about; e q u a l t o t h e r e q u i r e m e n t .

Furthermore,thethreelargestbanksare
ob1i;ed t,o use a
o f t h e i r d e p o s i t ; t o pant s g e c i f i e d t y p e s of medium-2.nd
15 p e r c e n t s i n c e Augpst 1959.
I o r l ~ 4 e r x c r e d i t . T h i s percentagehasbeen
(iv)

rck?.imvm percentage

( v ) Ceilingsaremaintained cn c r e d i t sf o rf i n a n c i n gd c m e s t i ct r a d e .
T'hesz ceilifigs were s u b s t a n t i a l l y i n c r e a s e d d c r i n g t h e l a s t
fewyears, s o
that their significence as
a r e s t r i c t i v e e l e m e n t i s smsll.
(vi) Commercial banlrs a r e c o t allowed t o f i n a n c e t h e
inkport of
c e r t s i c l u x u r y goods. The f i n a c i n g of othertypes of imports i s s u b j e c t
t o reg-ulation by t h e CurrencyCommittee.There
a r e no c r z d i t r e s t r i c t i o n s
on t h e f i n a n c i n g of theimport of goods c l a s s i f i e d . a s e s s e n t i a l as well as
on machinery and i n d u s t r i a l raw m a t e r i a l s .

e.

28

FAET I1

D?velopments in the capita3. ;narket

"

I n t h e l a s t fe'w y e a r s , t h e r e tms a f u r t h e r s t r e n g t h e n i n g of the Greek

c a F i t a lm a r k e t .
Eo.nds issued by t h e Government and t h e F u b l i c Power
Corporationwere successfuly p l a c e d v i t h non-lsa& i n v e s t o r s . The F u b l i c
Power C o q o r a t i o n i a s u e d two l o a n s o f D r 400 m i l l i o n and Dr 500 m i l l i o n ,
r e s g e c t i v e l y , ir. 1960 and 1961, a t a r a t e of i n t e r e s t of 7 p e r c e n t for a
of t h e boncsandi-epqments
z r e li?Jce?. t o
period of 1 5 y e a r s ; t h e v a l u e
%he drachma/U.S. do:Llar r a t e o r t o t h e p r l c e of e l e c t r 5 c i t y . In LgcO, t h e
Government i s s u e d bonds for D r 750 mi.llion of 5 p e r c e c t for a p e r i o d of
1 2 years, the proceeds
w i l l be x e d f , x the finar?,cing of the public development program. This l o a na l s oc a r r i e d
a d o l l a r cluase. I n April 1962, t h e
Government i s s u e 2 a 15-year bond l o a n of D r j . , O l G m i l l i o n . Y%e bonds w i l l
3elssuedatpar,Kith
2. y i e l d of 5 p e r c e n t i n t e r e s t ,
a s well es various
lottery p r i c e s ; t h e t o t a l y i e l d
i s estimsted a t 6.5 percent.Holdershave
t h e r i g h t t o repayment of p r i n c i p a l , i n t e r e s t arid l o t t e r y r e c e i p t s e i t h e r i n
drachma o r i n t h e drachma equivalent of t h e noainal v a l u e i n U.S. d o l l a r s 01:
tlle b a s k of t h e o f f t c i a l parity at the $!me of pament;. A l l p u b l i c bond
issues a l s o b e n e f i t from v a r i o u s t a x exemptions.
FrTces of s h a r e s of i n d u s t r i a l e n t e r p r i s e s , banlrs andinsuranceccmpnies
ti-ailed on t h e Athens Stock Exchange iEcreased by about 60 p e r c e n t i n l9LO
al;d 64 perceilt i n 2.961. P r i c e s r s e almos-t c o n t i n u o i w l y u n t i l A p - i L / I . k y lgfl,
then declined until Septemberbutroseagaininthelastq-uarter
of' 1961. Cr,e
f z c t o r c o n t r i b c t i n g t o t h i s sharp i n c r e a s e i n s h a r e p r i c e s
is t h e l i m i t e d
supiGy of new i s s u e s 5y p r i v a t e e n t e r p r i s e s , which i n t u r n results ~ I - C I Z t h e
small. mmber or" l a r g e i n c o r p o r a t e d e n t e r p r i s e s and the g e m r a l d e s l r e t o
of t h e e n t e r p r i s e s .
mintair, the closed fcmily character

- 23 4.

PART I1

Fublfc f j~nance
a.

C e n t r a l governmentbudget

"

r e s ultsfor

1960"
and1961

In recent years current bltdgetary revenue has risen faster than current
expenditure and t h e s u r p l u s on current budget amounted t o D r 153 m i l l i o n i n
1953, D r 251 m i l l i o n i n 1960 and t o D r 1>201.m i l l i o n i n 1961. The c u r r e n t
snrplus has financed an increasing share
of government investments, and i n
1960 and 1561 t h i s s u r p l u s t o g e t h e r w i t h revenJe fromgovernmentinvestment
3'5 per cent, respecti-vely,
o f government investments.
f:nanced 19 Fer cent and
Dorcestic i s s u e s o f T r e a s w y b i l l s andbondscovered
26 F e r c e n t and 20 Fer
o f government investmentsinthe
tvo yezrs,whilecomterc e n t ,r e s p e c t i v e l y ,
45 F e r
g s r t f u n d s o f f o r e i g n g r a n t s and. foreign leans finance6 53 per cent and
c e x t ( s e e T E ~ I ~ 19'
S and 20).

I/

Ccrrent expenditure rose 3 y 6 p e r c e n t i n 1960and 11 p e r c e n t in I-961,The Zncreese i n e x p e n d i t u r e i n 1960 vas m a i n l y r e l a t e d t o h i g h e r

salaries for
C i v i l s e r v a n t s and t o i n c r e a s e d e a e n d i t u r e f o r s e r v i c i n g t h e p o s t w a r p u b l i c
debt. k l a r g e pert of t h e i n c r e a s e i n e q e n d i t u r e
f o r 1961 tras n o t s p e c i f i c a l l y a l l o c a t e d on the various expenditure
items i n thebudget.
A breakdown
of exFenditures by c a t e g o r i e s is g i v e ni n Table 21. I n 1960 defenseand
i c t e r n a l s e c u r i t y emounted t o 35 F e r c e n t of t o t a l c u r r e n t e x p e n d i t u r e s ,
andtrelf'are t o 7 Fer cent, and pensions t o
education to 9 per cent, health
1-3 per c e n t .
Goverment Investment eqenditures
i n 1960 amounted t o Dr 4,122 m i l l l o n ,
21 per c e n t more t h a n i n 1959, and 22 pe-r celzt of t o t a l b u d g e t a r y e x p e n d i t u r e s .
The l a r g e s t i n c r e a s e s o c c u r r e d
in o u t l a y s f o r communications ( 6 2 p e r c e n t ) ,
l a n d improvenent (+76 per c e n t ) , as w e l l as !:.ndustryandmining
(+77 F e r c e n t ) .
I n 1561, GoTJernment investment expenditures rose by 23 F e r c e n t t o
D r 5,057 m i l l i o n , o r 23 Fercent of t o t a l b u d g e t a r y e x p e n d i t u r e s .
The main
e q a n s i o n i n government investment was a g a i n f o r i n d u s t r y and minjng (+72 per
cent), comnmications (+23 p e r c e n t ) andland improvement (+22 p e r c e n t )
(see Tzble 22).
Investments by public institutions like the Agricultural
Bank, t h e
Public Fever Company, t h e Economic Develoyment F:lnance Organization, and t h e
Telecommunications Organization amounted t o more t h a n h a l f of investment.
Such investmentsrose by 10 per c e n t
e q e n d i t T t r c s c o n t a i n e d i n thebudget,
i n 1960 and 20 F e r c e n t i n 1961.
Total current revenue
i n 1960 was Dr 1k,911.5 m i l l i o n , o r 6 Fer Cent
h i g h e rt h a ni n
1953. I n 1961 t h e r e was anincreaseof
17 per c e n t .D l r e c t
t a x e s i n 1360 amounted t o D r 2,650 m i l l i o n o r 17 p e r c e n t of t o t a l revenues.
I n 1361 t h e y i e l d or' d i r e c t t a x e s r o s e b y 17 p e r c e n t com-pared with 1960 t o
D r 3,254 m i l l i o n . I n d i r e c t t a x e s r o s e b y
9.5 p e r c e n t i n 1960 and by 15 p e r
c s r t Ln 1961. The main r e a s o n f o r t h e i n c r e a s e
was h i g h e r l e v e l of economic

1/ Including in 1961 t h e t r a n s f e r of E r k60 m i l l i o n t o t h e F a r E e r s '

Insurance Organization established
in t h a t y e a r .

Social.

Table

19. C e n t r a l Government Budget, 1959-52

( I n m i l l i o n s of drachmas

1962 1961 1960 1959

Actual
Actual

A ct u e l

Budget

5 057

6 OCO
5,2co
-4,820

Current Budget
Revenue
Expenditure
Surplus
InvestmentBudget
Revenue
Expenditure

3,396

-2,969
-3,592
Over - a l l d e f i c i t

Source:General
for

-2,81

4 122
-3,341

-4,465
-3,26L;

AccountLng Office.

f
l I n c l u d i n g c o l l e c t i o n of D r 621 m i l l i o n f o r 1961 and Dr 7C'2r n i l l i o r

1962 i n f a v o r

o f t h e Faraers Social Ir-surence Ckganization.

I n c l u d i n g t r a n s f e r s t o t h e FSIO of 3r 460 m i l l i o n for 1961 and
Dr TOO m i l l i o n for 1962.

- 31
Table 20.

PLlT 11

Financing of h e r - a l l Budget D e f i c i t

1959-62

(In m i l l i c n s of drachmas)

1960 1959

1961

Budget
Actual
Actual
Actual

1,177

abroad
from
Transfers

1,380

"

1,630

650
600

Gt5er

644
503

752
597
31

599
450
24

FoL-eigrL Loans

353

U.S.

810

1,212

331

73265
737

grants

Loans

Other Loens

30

Dorestic LOZLIS
Treasury b i l l s
Sonds
Other

Tot31
Sowce: General Accounting O f f i c e .

22

1-962

1,073

@-TO c o n t r i b u t i o n s

U.S.

390

822

380

1,480
1,215

Table 2 1

32

PART I1

Current Budgetary Expenditures

1/

( I n m i l l i o n s of drachmas )

19601959

Actual
Budget

1961

3,9777

Internalsecurity

1,103

Education

1,416

Eealth and welfare

1 126

Defense

>-griculture

455

P u b l i c debt

687

Subsidies

817

Pensions
Other

Toi.al
Source :

14,142

General Accounting Off ice.

I/ 1nclndin.g defense exsenditwe financed

f
2

by NATO.

Including unallocated reserves.

3-/ Actual expenditures amounted t o 3r 16,548 m i l l i o n .

- 33

PART I1

c-

r-l

0
m
M

(3

V I 1
r
i

t-

- 34-

PART Ii

"

1959
Actual
1. D i r e c tt a x e s

Income tax
Income tax (FSIO)&/
Froperty tax
Other
2. I n d i r e c tt a x e s

Custom r e c e i p t s
Custom r e c e i p t s ( F S I O ) ~
C o n s u p t i o n taxes
Consumption taxes ( F S I O ) ~
Transaction taxes
Transaction taxes ( F S I O ) ~
Other

3. Other r e c u r r i n g
4. Othernon-reTwring

5. From StateInvestment
6. T o t a l
Source : G e n e r a l X c c o ~ i t i n g Cff i c e .
Farmers Social Security Organization.

1960

AA
C tcuta
ula l

1761

1962

Budget

35 -

e c t i v i t y . The largestsinglerevenuesource
i s customs r e c e i p t s which
increased 'zy 3 F e r c e n t i n 1960 and 17 -per c e n t i n 1961, t o U r 5,462 million
( see Table 2 3 ) .
I n 1960 t h e y i e l d o f t h e d i r e c t t a x e s
amounted t o a-aout o m - f o u r t h of
t h e y i e l d of' j-ndirect taxes and i n o r d e r t o i n c r e a s e t h e y i e l d c f
t h e direct
t a x e s t h e G o v e r m e n t h a s enacted legislation and intro6uced measures to
of evidence for the applica-tion
reduce t a x evasion, includi-ng stricter rules
cf r e n t
ofcorporateratherthanTersonal
income taxes, pu'alic recording
contracts,stricterrules
for assessment. of incc;mes of liberal professions
2nd h i & e r p e n a l t i e s f o r t z x e v a s i o n . L e g i s l a t i o n
i s presently under CCDsidel-ation aiming at a more e q u i t a b l e d i s t r i b u ; t i o n c f t h e t a x
burderi,
Lnc1u6tng a revisior; of tile various exemptions granted
f o r special purposes
or t o s p e c i f i c Groups.

i s financed by counterpart fund.s of' f o r e i g n

from domest-ik borrowing. Tn 1960 t h eo v e r - a l l
d e f i c i t amounted t o Dr 3,341 million, or 18 Fer cent of t o t a l b u d g e t a r y
expenses, and it was covered as follows:counterpart
funds o f t r a n s f e r s from
f o r e i g n a i d a d loans Dr 2,190 million,anddomesticloslns
Dr 1, 151 m i l l i o n .
I n 1.561 t h e G e f i c l t was s l i g h t l y l e s s , Er 3,325 m i l l i o n , o r 16 p e r c e n t of
The o v e r - a l l b u d g e t d e f i c i t

a i d and loans, and r e c e i p t s

t o t a l e x p e n d i t u r e s and counterpart funds of f o r e i g n a i d and loans covered

Dr 2,295 millionanddomesticloans
G r 1,040 m i l l i o n ( s e e
Table 20).
b.

Government
budRet
"
-f o r 1962

The budget for 1962, w!?ich was p r e s e n t e d t o F a r l i a r r e n t i n March 1962,

provides for an increase in current expenditures of
13 per cent over actual
expend'tures i.n 1961 t o D r 13,6.55 m i l l i o n , ?act i n government investment
expenditLJreof 19 p e r c e n t o v e r a c t u a l e x p e n d i t u r e s t o
ijr 6,000 m i i l i o n .
Current revenues ere estimated to increase by
7 Fer c e n t t o Dr 19,045 m i l l i o n .
The estimated surplus o f t h e c u r r e n t b u d g e t t o b e a p p l i e d t o w a r d t h e f i n a n c i n g
ofinvestment
i s s u b s t a n t i a l l y s m a l l e r t.han. i n 1961. The over-allbudget
d e f i c i t i s expected t o i n c r e a s e b y 48 p e r c e n t t o 13r 4,820 m i l l i o n , o r
o n e - f i f t h of t o t a l e x p e n d i t u r e s .
Somewhatmore
t h a no n e - t h i r do ft h i s
d e f i c i t 17111 be covered by the proceeds of dornestlc 'bond and Treasury b i l l
Tssiles, the remainder
is expected t o be coveTedby counterpart funds of
foreign 8ssLstance (transfers
and loans) (See Tables 19 and 20).

The 1962 budget provides for higher current expenditures mainly

for
m g e s , s a l s r k s andpeusions,education,healtnandwelfare,
and t h e
s e r v i c i n g of postwar debt and larger investment outlays f o r indUStryand
per cent).Investmentexpenditures
mining (-1-59 p e r cemit) and tourism
by pu'blic institutions not included
Ln t h e government budget are scheduled
t o i n c r e a s e b y 35 p e r c e n t t o Dr 3,56)-1.m i l l i o n , e q e c i a l l y f o r i n d u s t r y
and
': m i l l i o n t o Dr 500 m i l l i o n ) , a g r i c u l t u r e (+21 p e r c e n t ) I
mining(from D r 7
and e l e c t r i c power (+26 -per c e n t ) .

(-&sa

Current revenue i s estimated t o rise by 8 per cent t o Dr 19,045 m i l l i o n .

The y i e l d of d i r e c t t a x e s i s expected t o increase by 10 per ceut, and of
i n d i r e c t taxes by 6 p e rc e n t .
The expectedincrease in economic a c t i v i t y ,

- 36 -

PART I1

the gradual iqrovement in

t h e e f f i c i e n c y o f t h e i n t e r n a l revenue servlce
estimate of d i r e c t t a x e s .
Income frcm
have made it p o s s i b l e t o i n c r e a s e t h e
s t a t e inlrestments i s set a t 35 p e rc e n t above t h e r e s u l t s for 1360. A s
mentioned above, about one-third of the over-all budget deficit
of Dr 4,820
million i s expected t o be covered by the proceeds of a governmentbond issue
of Dr 1,010 m i l l i o n ( f o r d e t a i l s s e e p .
28 above),and of t h e s a l e of
D r TOO m i l l i o n o f T r e a s u r y b i l l s .
The remainder (Dr 3,110 million) of the
estimated 1962 d e f i c i t i s t o be covered from counterpart funds of foreign
a s s i s t a n c e , compared with D r 2,285 million in 1961.

c.

Government s u b s i d i e s

(i) Agri.culture
A comprehensive swomary of t h e c o s t o f d i r e c t a g r i c u l t u r a l
s u b s i d i e s i s given i n Table 24.
A 1 1 thesesubsidieshavesince
1958 been
,
covered by the Government budget, except when otherwise indicated, i.e.
during the years
1.960 and 1961 s u b s i d i e s f o r p u l s e s a n d c o t t o n
amounting t o
Dr 150 m i l l i o n i n 1960 and Dr 219 m i l l i o n i n 1961 h2ve n o t y e t b e e n s e t t l e d .
However, i n 1961, t h e r e was elso a surplus of some Dr 180 m i l l i o n i n t h e
Government's consumer good account
that has not yet been transferred to the
budget.There
i s u s u a l l y some time l a g between t h e dateof Government
purchases of agricxltural products and the budgetary settlement of remaining
pp. 4
6 above, a g r i c u l t u r a ls u b s i d i e s are
d e f i c i t s . A s aiscussedon
g r a n t e d l a r g e l y t h r o u g h government intervention in the market
and t h e i r
financing are reflected in szecial accounts held with the
Eank of Greece.
The movements i n t h e i r a c c o u n t s d u r i n g 1960 and 1961 are shorn i n t h e
Losses o r surpluseson
t h e k accountsareincluded
Appendix, Table 1.
In t h e government budget. Moreover, a g r i c u l t u r e is favoredby low lnte-rest
Bank.
loans granted by the Agricultural

A s may beseen from Table 24, t h e t o t a l c o s t o f a g r i c u l t u r a l s u b s i d i e s

i n 1~61
was D r 271t m i l l i o n compared w i t h D r lc26 mlllion i n 1960; t h e y were
about the same a s i n 1959, i f t h e e x c e p t i o n a l l o s s on wheat i n t h a t y e a i s
disregarded.

(i i) Ra-ilroads
The most important other stAbsidies are those granted
t o the
r a i l r o a d s (seeTable: 24 and Appeniiix, T&Le 2 ) . . Revenue of ':,:.le
railroads covered only
s m e 60 p e r c e n t of t h e i r e x p e n d i t u r e In 1960, niainly
because the rates were fixed below cost as
a r e s u l t of s o c i a l andgenera:'.
rziLl.:tca~ucJ.
econ0mi.c policy considerations, and t h e h i g h s o c i a l ' b e n e f i t s p a i d t o
employees(pensions,
f o r instance, are equal t o one-half of wage a d salnry
expenditure). The s u b s i d i e s t o t h e r a i l r o a d sm o u n t e d t o D r 456 n?iiii.on 511
1960 and approximately the same amount i n 1961.

?ART I1

37 -

Table 2 4. Government Sdbidies

(12 r d l l i o n s of drachmas )

1959

Actual

I. A g r i c u l t u r a l S u b s i d i e s

1960

12ct;lal

- " " .

1. F e r t i l i z e r s
2. TOIXXCO (1955-59 c r o p s )
3. C u r a n t s end s u l t a n a s
h . Pulses andcot,ton
5. D e f i c i t i n t h e consumer
goods account
6. S p e c i a lf u n d ,o l i v e
oil
7. T,ursl seccirity forces
6. Other a g r i c u l t u r a ls u b s i d i e s
9. E x t r a loss frcm t h e sale
abrcad of d o m s t i c wheat
Total

1961

Last
Estinates

1962
Budget

"
_
y
_

38

1co

23

100

15

70
1c6

219111
.

21
- ~80"

534

n. a.
50

n.8.
n.a.

3-30
n.a.
n.a.
100

n. a.

11. Other Subsidies

i. Hail~~cjrs
2. Ccastalskipping

3. Greek c l e r g y

T9tal

Grand total

f
l Extrabudgetary deficits.

-2/

Surpllx n o t t r a n s f e r r e d

473

458

54
-

54
-

-22
12

54.9
1,143

Go the budget.

12

524
950

450

500
n. a.
n.a.

54
-

790

n. a.

516

n. a.

U.

S o c i a ls e c u r i t y

38

for f c m e r s

-4 social security system f o r t h e r u r a l > o p u l a t i o n - - c c m

L
!
milil-icn, or
h a l f of thetotalpopulation--wasintroduced
in May 1961. The i n s u r a x e

W i t ! l insurance
scheme combines o l d agepensions,medicalandnospi.tar!~treatmxxt
o f c r o p s a g a i n s t hE!ll a n d f r o s t .
The sourcesof t h e newly-establLshed
as follo'crs: (1) 2 p e rc e n t of
Farmers' SocialInsuranceOrganizationare
g r o s s a g r i c u l t u r a l income of t h ei n s u r e d ,
( 2 ) c o n t r i b u t i o n s .'A t h ei n s u r e d
varylng from Dr 180 t o D r 300 p e r annum according t o t h e v a l u e of property,
( 3 ) g e n e r a l i n c r e a s e s i n t a x rates, i . e . , a n a d d i t i o n e l
10 s e r c e n t on
personal income t a x e s (for l a r g e incomes, this p e r c e n t a g e i x r e a s e s t o 15 r;er
cent), a.dditiona1 1-5 perceilt on corporate income t a , 10 p e r c e n t on s t a n p
t a x , 10 p e r c e n t or1 t a x e s on s e v e r a l d u r a b l e consumer goods, as well as
s p e c i a l t a x e s on c i g a r e t t e s , c o f f e e ,
cocoa,beerandotherluxuryitems.
Old
age pensions are granted to farmers over
65 yeers of age who havebeen
for 25 years. For t h e i n i t i a l
i n s u r e d and p a i dF e r s o n a lc o n t r i b u t i o n s
applicationofthe
scheme, e n p l o y x e n t I n a g r i c u l t u r e for 25 y e a r s r e p l a c e s
t h e insuranceperiod.
The pension amounts t o D r 300 p e r month f o r p e n s i o n e r s
w i t h a spouseover 65 or children under 14, D r 220 p e r nontn f o r p e n s i o n e r s
with spouse under 65 and Dr 180 per month f o r p e n s i o n e r s tiit11 no family
members. T h i s pension i s increased by D r 10 f o r each four y e a r s o v e r t h e
basic25-yearperiod.
The number of pensioners i s estimated a t ?CO,OOO end
t o t a l , annu& p e n s i o n e q e n d i t u r e i n t h e f i r z t t h r e e .yccrs of the ;l~nye
estimated a t D r 200 m i l l i o n .
~

-9

Estimated expenditure and revenue

of t h e Farmers' Social Insurance
OrganizationaregiveninTable
. Thescneme will be f u l l y q e r a t i n g by
1964, althoughpensions w i l l b e p a i d s t a r t i n g w i t h
J . d y 1962. It i s e q e c t e d
that revenue will exceed expendlture 5y about 8 p e r c e n t i n
1964.

39 -

PPF,'? TI

Table 2 5. Farmers' Social Insxance Organizetion

Estimated Revenue and Expenditure for 1561-6k

Revenue

Personel c o n t r i b u t i o n s

3udgetary contributions
Frcm pi-operty
Emenditure
Pensions
Medical care ex?+enses
Damage compensation
Rdiinj.strativeexpnses

l/ P e r s o n a l c o n t r i b u t i o n s a r e p a i d f r m January 1, 1962.
2 / Pensions wi.11 be el d from JULY1, 196'2.
" I
P a t of the expzlses.
The rest w i l l be covered bytheSta.teSudget.
- 1964 i s t h e f u l l year of f u l l operation.

5.

Balance
of

papents

In r e c e n t y e a r s t h e Greek balance ofpayments h.x beenchax-acterize6

by a n i n c r e a s i n g t r a d e d e f i c i t ,
as a r e s u l t of a s u b s t a n t i ? l ~ 5 s ei n
i q o r t s , and a continuousand rising surplus on invisible account, xhich
however was n o t l a r g e enough t o a v o i d a c u r r e n t a c c o u n t d e f i c i t .
The
inflow of p r i v a t e c a p i t a l and f o r e i g n a i d not o d y covered t h e d e f i c i t on
current account but
also allowed a gradual improveEent i n rronetsryresel-ves
(see Table 26).
a.

Foreign
trade

Importpayxents i n 1960 r o s e by 9 p e r c e n t t o $497 m i l l i o n . The

rnain f s c t o r 'cehintl t h e r i s e i n i m p o r t s i n 1960 was l a r g e r i m g o r t s o f
food, which r o s e by 32 per c e n t ; i n p a r t i c u l a r , i m p o r t s
of corn and coarse
g r a i n s , o l i v e o i l and meat. R a w rraterial importsroseby
14 p e r c e n t ,
e s p e c i a l l y i l i p o r t s of wool, i r o n and s t e e l . Therevas a d e c l i n ei ni m p o r t s
o fp e t r o l e u mp r o d u c t s ,m c h i n e r y
and t r a n s p o r t equipment.Imports
of
m a u f a c t w e d c o n s i n e r goods r o s e by 10 p e r c e n t , t h e l a r g e s t i n c r e a s e s
were i n p r i v a t e a u t o E o b i l e s (+7ip e r c e n t ) , t h r e a d s a n d y a r n s ,
and paper
a r t i c l e s( s e e Tab:Le q a n d Appelldix, Table 4).

I n 1961, importsexpandedby
13 p e r c e n t t o $561 m i l l i o n . The
increaseinvolvedespeciallytransport
equipment (+5L p e r c e n t ) ,
machinery (+22 per cent), and
Ir,anufactured consumergoods
(+19p e r c e n t ) ,
i c p a r t i c u l a r e l e c t r i c a l equipment (433 p e r c e n t ) , p r i v a t e autorr.o.biles
(A0 p e r c e n t ) , and medical and pharmaceutical products
(+25 p e r c e n t ) .
Food importscont.inued t o rise bEt at a l o v e r r a t e than in 1960, except
f o r i z p o r t s o f ire:&t and l i v e a n i m l s xd1ich rose by sori;e j0 p e r c e n t .
Raw material impo:rts rose by some 7 p e r c e n t , ( e s p e c i a l l y
ix-on end s-tee?.
27 and Appendix,Table 4).
and chemicals) . (SeeTable
Exportrecei:ptsin
1960 f e l l by 2 p e r c e n t to $XI$. mill-ion.In
1961, t h e y r o s e b;y 1 2 p e r c e n t t o $254 m i l l i o n b u t s t i l l covered only
42 p e rc e n t of i q p o r t payments.This
improveir,ent vascaused by g r e a t l y
expanded export; (of c i t r u s and o t h e r f r e s h f r u i t s
(A8 g e r c e n t ) ,
cotton ("43 per cznt), tobacco
(+11p e r c e n t ) , o f f s h o r e
and T?LG@ p ' o curement (-61p e r c e n t ) , as v e l 1 as variousmiscellaceous i t e m (see
Table 28)

The rcost i q m r t a n t Greeke,xport

c o m o d i t y i s tobacco,accounting
forover olie thirl3 of t o t a l exports.Luringthe
1960-61 export season,
tobaccoe-Tortsmounted
t o $75 m i l l i o n . 'The 1961-62 exportseason i s
expected t o b r i n g good r e s u l t s and a l l available tobacco s t o c k s are
l i k e l y t o be sold. Tobacco e x g o r t s d u r i n g t h e
l962-6j seasan will
c c n s i s ta h o s te x c l u s i v e l y
02 t h e 1561 harvest.Inforrmtion
or! tobacco
e q o r t a t3 t h e a a j o r p u r c h a s e r s andaverage p r i c e s p i d between 1357
and 1961 i s given i n T&le
Tobacco exports ( 3 3 7 q u a n t i t y ) .to
t h e European Ecorolai.c Cornunity declined substantially duriag tke
last
, .
fcw years (see a l s o p. 53 below), whiie export; to 3cwit:t UL:L ~.::~xxY:~~,s

29.

- 41

PART II

lc54. fi

-212.5
-242.3

-5
11.9
-15.4

Bzlancc on services ar-113

pri-"-atedonations
Balance on currcnt,account

-67.5
-18.8

-21" 2

-12.3
-9.2
-25.2

162 Ij

207.7

-60.c

-50.8

38" 3

Icl.8

49.5

-6q6
-45.9

i3
5.6
-15.g

-IC.5

7.E!

2.e

Ichnnge in outstanding
bclznce of supnliers ' cl-cdif
2xcludir.g nxhinery inported under
tho terms of Lor7 ?TO. 2687/53
e n c o u r q i f i g foreign invcstmcnt,s
Excluding food donations ucder t h c
terms of U. 6. P u b l i c Lnr.1 No. 480,
T i i l c 111
Zxcludingimports of U.S. I'commn
items"
Zxcludicg Anortizotion of B r i t i s h
S t a h i l i z n t . i o n Lcan

-326.9

-10,3
-8.0

58,G

Xxcluding

497.1
-2c8.6

0.4

7.1+
7.cj
5.6

9.

.
0

L12

FART I1

1-959

1963

( gc. 6)

47.5
63.6
14.5
145.8
(89.9)
(55.5)

454.8

497.1

1961

Food
Basicfoodstuffs
Other f o o d s t u f f s
Raw m a t e r i a l s
Consunption rriaterials
Construction materials

Petroleum products and coal

Machinery
Transportequiprnent
Manufacturedconsumer goods
Basic consumer ,goods
Other consumer ,goods

Unallocated freight
Tot a l

Source:

L/

1.5

0.2

Bank of Greece, i4on.thly S t a t i s t i c a l B u l l e t i n ,

Cn t h e basis of foreign exchange payments (c.

i. f . )

Narzh 1962.

43 -

PART iI

Y. T o b a c x
C.

Fnw material semi-finished goods

1. Cotton
2.: Skins ana-hzcies
.
3.. Resins' and t u r p e n t S n e
4. Wher raw material
"

E. Ilanufscture and h a n d i c r n f t s

"

1. T e x t i l e s

3. Other

G. i.Iiscsllaneous

Total

2G7384

8,927.-

4,392
5,go6
ll+,411

D. Mineralsandores

2. Cement

!tC;,Z?Cg

-,-

6,547

906

42,233

199113
,

9,k07
7$35
6,207

l.S,003

7 "76
t

"

2,622

53,lbij
27,398
10,797
7,947
7,003

"

1-5 %io
f

8 , OCE
3, csg

4;26h-

4,1!7

818
4,099

4,750

5 ,775

8,&4

1,377

977

Table 29.

:
1 countries

Totel
Source:

Tobacco Exports

1959

1960-

1961

1957
TOOO
tons t o n

000
tons

000
tons

11.4

8.8
-

7.7
-

9.6
-

12.5
-

67.5

61.9

56.o

60.3

65.6

I
_

1958
$ -per
ton

National B a n k of Greece,Greece

$ per
ton

COO

tons

Todzy, March 1962.

$ per
ton

' COO

"
"

tnns

$ per
toin

- 45 -

PART I1

Exportsofcurrants
and s u l t a n a s are t h e second l a r g e s t 02 t h e Greek
exports. Greek p-cducticn 0; c.urrants andsu'tanas
accouitedforabout
or,e q u h r t e r o f t o t a l world production in receiltyears.
Daring tile 196061 seasoc,exports o f sultclnasdeclined .by 50 p e r c e n t cornpared with the
precedingseason as a consequence cf crop damage i n ~ g & . The 1961 crop
was good and i s about double t h a - t of 1950, and exports are promising.
a x p o r tp r i c e s o f s u l t a n a sr o s es i g n i f i c a n t l y
en recentyears.Currant
exports have i n c r e a s e d s t e a d i l y i n the l a s t f e v y e a r s , b u t e x p o r t p r i c e s
have d e c l i n e d s l i g h t l y .
The 1961 currantcrop i s e s t i i l a t e d t o be s l i g h t l y
.beic;v tile 1360 crop; e:cpport p o s z i b i l l t i e s ciurifig t h e 1361-62 season are
e q e c t e d t o %e &out the saxe as i n t h e l a s t season.Exports
of s u l t a n a s
t o t h e F e d e r a l R e p u b l i c o f Germany, which used t o be t h e l a r g e s t customer
o f Greece i n t h i s p r o d u c t , f e l l s u b s t a n t i a l l y i n r e c e n t y e a r s ,
and s u l t a n a
8 shift
e x p o r t s t o t h e U n i t e d Kiagdorn a l s o dzclined, mainly because of
I'ron Greek products to those o f Turkey and A u s t r a l i a .

T t b l e 3 . Wait ExForts
( ~ t h G 1 l s a l : d metric t o n s )

43
"

Smrce:Naftelliooriki,Athens,Greece,

November 6, 1361.

- 46

PART I1

Yhe g e o g r a p h i c a l d i s t r i b u t i o n of i a p o r t s and exports is shown i n

Tabies 31-33.
The t h r e el a r g e s t r a d i n gp a r t n e r so f
G%eec!e a r et h e
Federal Republic of Germany, t h e U n i t e d S t a t e s , and the United Kingdom.
The s i x members of t h e European Economic Cornunity i n 1960 and 1361
accounted for some 40 per cent of imports
and 32 p e r C p i l t or' i t s exports
( f o r d e t a i l s on r e l a t i o n s w i t h t h e EjX,s e2 p.53 below).
Soviet area c o u n t r i e s i n 1960 and 1961 boughtabout22percentof
by
exports and suppliedabout I1 p e rc e n t of imports.Thesecountries,
o r d e r of t h e v a l u e o f t h e i r t r a d e w i t h G r e e c e , a r e t h e
U.S.S.R.,
Czechoslovakia,Poland, Hungary, East Germany, Buigariaand Rumania.
as Greek
Trade with Soviet area countries increased in recent years
products faced difficulties in
Westernmarkets p a r t l y b e c a u s e q u a l i t y
and s p e c i f i c a t i o n s were n o t up t o r e q u i r e d s t a n d a r d s and p a r t l y b e c a u s e
importsofagricuLtura1commodities
were r e s t r i c t e d ; w h i l e a t t h e same
time Soviet area c o u n t r i e s were t r i l l i n g t o buyGreek a g r i c u l t u r a l products a t p r i c e s o f t e n h i g h e r t h a n t h o s e o b t a i n a b l e i n
Western countries.
Receipts from exports accounted for 50 p e r c e n t o f t o t a l f r e s h
fruit
e x p o r t s i n 1960 and 35 p e r c e n t i n
1961, f o r cotton 42 p e r c e n t , 2nd
43 p e r c e n t o f t h e t o t a l
wereexported t o S o v i e t c o u n t r i e s i n t h e
two
was 22 per cent and 16 per cent, respectivePd;,
years; for tobacco the share
and f o r s u l t a n a s <and c u r r z n t s 1 2 per cent and 18 p e r c e n t , r e s p e c t i v e l y .
Imports from Soviet area co1mtries consist mainly of refined sugar, meat,
petroleumproduct:;,coal,timber,
metals, t r a n s p o r t equipment,and
other
uachinery. Greekim-ports
from theSoviet area countriesexceededexports
by$12 m i l l i o n i n 1960 and $8 m i l l i o n i n 1961 ( s e e Appendix, Tables 5 an2 6).
An almost s t a g n a n t l e v e l o f e x p o r t s d u r i n g r e c e n t y e a r s c o n s t i t u t e s
t h e main problemofthe
Greek balance of payments. The GreekGovernment
i s p r e s e n t l y c o n s i d e r i n g a series of measures aimed at encouraging exportsc:.
These l e g i s l a t i v e and a d m i n i s t r a t i v e a c t i o n s r e l a t e t o r e d u c t i o n o f c h a r g e s ,
reimbursement of l e v i e s and d u t i e s , e.g.,stamp
d u t i e s ,t h ee s t s b l i s h m e n t
of fixed percentages deductible
from taxable income f o r export promotion
expenditures, and p r e f e r e n t i a l c r e d i t f a c i l i t i e s .

In A p r i l l9&, t h e Governmentannounced more favorable t e r m f o r

medium- and long-term financing for investment and working capital
requirements of industrial
and mining enterprises
whose p r o d u c t s a r e or
w i l l be internationally competitive,
and p r e f e r e n t i a l i n t e r e s t r a t e s
on
a l l c a t e g o r i e s o f bank c r e d i t s f o r i n d u s t r i a l and h a n d i c r a f t firms t h a t
succeed t o e x p o r t c e r t a i n p e r c e n t a g e s
of t o t a l sales a g a i n s t c o n v e r t i b l e
'p. 27 above).
The Goverment-owned
currencies (for d e t a i l ss,e e
To
P u b l i c Power Corporation will reduce i t s p r i c e st oe x p o r tc o n c e r n s .
encourage power i n t e n s i v e i n d u s t r i e s , t h e
Government announced t h a t by
1965, e l e c t r i c i t y rates w i l l bereducedby 20-25 per cent f o r a l l
i n d u s t r i a l and farm use. TheGovernment i s alsoencouragingtheestablishment of l a r g e modern e x p o r t e n t e r p r i s e s and f o r t h i s it h a s i n v i t e d
the cooperation of foreign businessmen.

93.6
85.4
51.;;.

37.0
25.4
16.7
26.3

18.1
12.6
15.1
11.0

10.6
9 -1
7.6
'71.2

'i97.i 561.2

44.3

32.7

35.4
32.6
30. c)

12.3
io.9

1.7
16.3
7.0
1.9

10.0

3.3

7 -5
4.6
2.9
41-7

228. G

45.6
38.1
-3.C.9 -31.4 -42.0
-18.8 -24.2 -35.7
-19.0 -15.5 -23.9
-17.5 -15.0 -18.1

-5.4 -10.0 -3.7

-11.2 -11.1 -11.1

-11.3 -10.7 -1k.3

-1.1 -5.1 -4.7
-8.1 -7.7 -1149

-0.4 -3.1 -1.9

-5.1
-4.5 -3.2
-1.3 -4.0 -4.0
-31-4 -29.6 -35.6

" ""

-242 3

-288.5 - 3 ~ 5 . 3

Table

32.

PART I1

48 -

Regional Distribution

of Trade 1,I

( I n m i l l i o n s of U. S. d o l l a r z )

1960
Common Market countries,
Imports
Exports

U n i t e d S t a t e s of America
Imports
Exports

196.8
67.8

39.6

85.4

17.2
15.6

85.5
38.o
-47.5

11.6

60.1

-129.o

32.6
-

-52.8

Soviet Area2/.
Imports
Exports

4/

S t e r l i n g Area
Imports
%xport s
Other E M
Imports
Exports
Other Euroa
Imports
Exports

57.6

Totalimports
Total exDorts

32.5

45.5

a .8

60.7

12.2

-12.1

25.1

-35.6

12.0

73.9
-158.3

68.9

21.3

-47.6

23.0
-

29.4

5.9

29.5

-17.5
497 1
208.6

5.7
100
100

10.7

22.3

-7.9

4.6
6.2

15.2
16.2

_
L

22.7
13. G

11.9

31.5

52.2

8.9
6.1

-m

41.4

232.2

44.5
12.7

-9.7

Rest of World
Imports
Exports

Percen?
of Tlstal

Percent
of T o t a l

56-3
15.9

10.0

28.7

5.1

6.8

-m

8.5

-8.7

12.9

-16.6
I
_

561.2

234.3

LOO
100

Source: Bank of Greece,Monthly S t a t i s t i c a l B u l l e t i n , Phrch 1962.

I/ Forej-gn exclnange payments and receipts.
->I;
. I F r a x e ,
West Germany, I t a l y , Eklgium, Netherlands, Luxembourg.

3: Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, Ru~acia,USSR.

-J

_.

GniGed King.cm, Ireland, Iceland and

U.K. overssas territories.
Axtrta, Demark, Sliitzerland, NorTJay, Slqeden, Portugal, Turke:r, S?n In.
Yug? 3.mia and Finland.

- 49 -

( ~ per
n cect,)
"
"

L?,C
j7J7 TJCountries
Countries
11

U.S,A.

So;-ie-cl
Area

Other

"

To Le1

Tobacco

42

10

21

22

61

C i t r u s Yruit

1c

72

13

55

Qllvn o i l

76

21

(tops)

50

PART I1

Gross r e c e i p t s from i n v i s i b l e s navecontinued t o e q a n d a t a r a p i d

rate; t h e y r o s e b y 15 p e r c e n t i n 1960 and 17 p e r c e n t i n 1361.
Net i n v i s i b l e e a r n i n g s i n 1960 wereaboutequal
to the proceeds
goods.During
1961, t h e p o s i t i o n improved further as
net receipts increased by
18 p e r c e n t andwere 5 p e r c e n t l a r g e r t h a n
In bothyears,the
main i n c r e a s e
theproceedsofexportsofgoods.
occurred in gross receipts from transportation
which r o s e by 27 p e r c e n t
by
i n 1960 and 9p e r c e n t i n 1961, gross receipts fron; tourisln rising
23 p e r c e n t i n 1960, and 33 per cent i n 1961, and e c l i g r m t s I remittances
( i n c l u d i n g workers r e m i t t a n c e s ) which increased by 4 per cent and 14 p e r
34) The i n c r e a s e i n s h i p p i n g r e c e i p t s
c e n t i n t h e two years (see Table
i s connected with the l a r g e s h i f t of ships from f o r e i g n t o Greek registrj:

from exportsof

Private capital, foreic assistance

and e x t e r n a l d e b t

The inflow of p r i v a t e l o n g - t e r m c a p i t a l
amounted t o ihk3 r a i l l i c n
i n 1959, $&2 m i l l i o n i n 1960, and $57 m i l l i o n i n 1961 (see Appendix,
Table 3 )
The h r g e r p a r t o f
t h i s came fromGreeksresidingabroad..
I!?
r e c e n t y e a r s it was i n v e s t e d t o a considerable extent i n r e s i d e n t i a l CCDstruction.

Legislation adopted in
1953 and 1961, and designed t o proriiote t h e
inf!.ow o f f o r e i g n c a p i t a l
t o Greece, i s discLssed .On p. 6 3 below.
Although these laws appear t o e n s u r e f a i r treatment and s u f f i c i e n t
ircentives to foreign investors, actual investment
by non-Greeksunder
them havebeen s ~ m l l . During t h e e i g h t y e a r s s i n c e
1953 i n which t h e 1 a T ~
to encourage foreign investment
has been i n f o r c e , t o t a l i n v e s t m e n t s
arr?ounted t o
approvedamounted t o $177 milliolz. Actual capital inflow
$53 million. Of .the approved $177 millioninvestments, $126 m i l l i o n
r e l a t e t o i n d u s t r y (aluminum p l a n t $59 inillion;shipyards $21 n i l l i o n ;
mining $20 m i l l i o n ) , and t h e r e s t f o r v a r i o u s p u r p o s e s

Loans from the U.S. Governmentamounted t o $14 m i l l i o n i n 1959,

$8 m i l l i o n i n 1960, and $13 m i l l i o n i n 1961, and n e t g r a n t s from t h e
U.S. Governmentamounted t o $37 m i l l i o n i n 1959, $50 m i l l i o n i n 1960,
and $32 raillion i n 1961
Lqgcs fromthe Government of t h eF e d e r a l

Repilblic Of Germany amounted t o $13 million i n

2nd $24 m i l l i o n i n 1961.

1959, $11 m i l l i o n

l
J
The "import" of s h i p s amounted t o $188 m i l l i o n i n
-million i n 1961 ( s e e a l s o p. 6 above).

In

1960,

1960 and $105

-51

Table 34.

Ser-vicesarid 'Private D a m t i o m

Emigrants
remittances
Transportation
Shipownersand
seamen ' s remittances
Repairs and supplies t o ships
T912ri52

Government s e r v i c e s( i n c l u d i n g
expenditures of foreign missions
and NATO i n f r a s t r u c t u r e )
Interest,dividends

PART 11

and p r o f i t s

!'orlrer.s remittances
Germny)
Other

88.G

102.I

41.7
20.9

25.8

17.2

9 08

9.7

6.3

n.a.

1.9

6.9

1 5 *9

18.0

20.2

237 2

273.2

313.6

"

Total

9.3. 'j

60.3

Travel aSrc;ad
Governneatservices
Transpcrtation
Interest,dividendsandprofits
Cther

Totzl

54-9
432.j

65J5

+207.7

"

75.5

52

&eluding t h e prewar debt the foreign debt increased

frorn $ j G 0
m i l l i o n a t t h e end o f 1959 t o $339 m i l l i o n at t h e end o f 1960 and -20
$388 m i l l i o n a t t h e end of 1961. Of t h i s , some $70-20 million E1i-e
short-term commercial debts
t o f o r e i g n s u p p l i e r s , and another $70-80
m i l l i o n are d e b t s t o t h e U n i t e d
States, r e p a y a b l e i n l o c a l currency.
I n 1960, t h e s e r v i c i n g o f t h e foreign debt amounted t o about $18 Eillion,
w h i l e i n 1961 it r o s e t o $21 m i l l i o n ( s e e Appendix, Table 7 )
The
since 1941.
s e r v i c e payment of t h e Greek prewardebthasbeensuspended
!&ere have been negotiations f o r t h e resunrp-lion ef t h e s e r v i c i n g o f t h i s
debt, b u t no agreementhasbeenreached.

d.

Konetnry
reserves

Gold and foreign exchange reserves i n 1960 rose by 8 p e r c e g t t o

$224 million; i n 1961 they increased! by 1 2 p e r c e n t t o $251 million.
They a r ee q u a l .to f i v e months imports (see T a b l e 35). The maintenance
of such reserves i s regarded necessary i n view of t h e v u l n e r a b i l i t y of
the balance o f payments p o s i t i o n , s i n c e v i s i b l e e , q o r t s c o n s i s t a l l n o s t
e n t i r e l y o f pri:mary products and are t h u s s u b j e c t t o l a r g e v a r i a t i o n s ,
and i n v i s i b l e r e c e i p t s depend l a r g e l y on e x t e r n a l c o n d i t i o n s beyond
Greek c o n t r o l .

Table 35.

NonetaryReserves

(In millions

of U.S. d o l l a r s )

Gold
Foreignexchange

Source:

I.M.F.,

I n t e r n a t i o n a l Financial S t a t i s t i c s .

6.

53

PART I1

P..eletionship with Zuropean Economic Cornunity

"

a.

T r m s a c t i o n sw i t h

lnernber c o w t r i e s of EEC

About one t.hird of Greek exports was directed tovayd G C c m n t x i e s ,

while Greek imports from
EEC c o u n t r i e s amomtzd t o sorre 40 per c e n t of
t o t s 1 i m 2 o r t s i n 1960 and 1961 (seeTable 3 6 ) . On t h e o t h e r hand, t r a d e
with Greece r e p r e s e n t s less t h a n 1 p e r cent of t h e Community's trJtal
foreigntrade.
Greek e e o r t s t o EES countries consist mainly
of foodst.uffs (mostly
f r e s h and d r i e d f r u i t s ) , r a x msterials ( m s t l y cotton, bauxite,, iron
ore,
t u r p e n t i n e and colophony),tobacco and 1.7ines. Greek i q o r t s from t h e
Cornunityare nostly machinery,venic?.es,indllstriai
goods, a d chemicals,
Although i n v i s i b l e t r a n s a c t i o n s have yielded a surplus f o r Creece,
t h e r e l s t i v e s h a r e of Greek r e c e i p t s from EEC c o m t r i e s vas o n l y one
t h i r d of t h e r e l a t i v e s h a r e of Greek i n v i s i b l e payrfients t o EEC c o m t r i e s e
Table 36. Transxctions cn CurrentAcccmt
%-kh
iliember Countries of t h e European Economic Commnity

a c t i ons
Experts (f.0.b.)
1n;ports ( c . i . f . )

1960

6i3

3-97
-129

of t o t a l
Greek transactiom
32

"

40

1961

of t o t a l
Greek t r a n s "
"

74
.
32
i
P.7

-158

32

4I

b.

As:xci.ationwiththeEuropean

51:

Economic Cornunity

I n J u l y 1961, Greece and the Members of the Europesn Zcc.coi-ic

Cornunity signed a t r e a t y a s s o c i a t i n g Greece w i t h the Comunity, t o
become e f f e c t i v ea f t e rr a t i f i c a t i o nb yt h ec o u n t r i e sc o n c e r n e d .
The
the Comunity,
t r e a t y e s t a b l i s h e s a customsunionbetweenGreeceand
comprising a g r a d u a l e l i m i n a t i o n o f t a r i f f s and q u a n t i t a t i v e r e s t r i c t i o n s betweenGreeceand
t h e EEC c o u n t r i e s and t h e adoptior?, of the
cormon e x t e r n a l tariff of the Cornunity f o r imports from ti1S.rd cou.ntriec.
It also provides for harmonization
of economic p o l i c y betweenGreece and
the Comunity, and Greece may o b t a i n developrcent loans t o h e l p speed up
t h e a d a p t a t i o n o f .the Greek economy t o t h a t of t h e r e s t o f t h e C o m u n i t y .
A Council of Association w i l l help achieve the objectives of the agreelrent.
GreekGovernment, o f
The Council i s coqposed o f r e p r e s e n t a t i v e s o f t h e
t h e ZEC, of the Council of the Comm~ity, and
of t h e Conmission of the
Comunity.DecisionsoftheCouncilofAssociationrequireunanimity.
Greece w i l l become a f u l l member of WC a f t e r a t r a n s i t i o n p e r i o d of
twelve years.

The Association i s based on a custom union ijhich, subject to

certain exceptions;, covers a l l t h e t r a d e betweenGreeceand
t h e EEC,
e l i m i n a t e s a l l t a r i f f s and q u a n t i t a t i v e r e s t r i c t i o n s
on t r a d e between
t h e F a r t n e r s andpi-ovides for the adoption by Greece
of the comon
externaltariffoftheCornunity
on imports frcm third countries.
The
custorns union i s t o be graduaily achieved within twelve years,
unless
exeptions arc provided for.

Both1 Gre2ceand t h e %EC c o u t r i e s s h a l l reduceimport

t a r i f f s a g a i n s t e a c h o t h e r by 10 p e r c e n t of t h e o r i g i n a l t a r i f f s every
18 Eonths f o r a period of nine years; during the following t h r e e y e a r s ,
t h e 10 percentreciuction
w i l l be effected annually.
For t h e EN!
countries,thereference
date i s January 1, 1957; f o r Greece it i s t h e
o f theagreement.For
a number of i n d u s t r i a l
d a t eo fe n t r yi n t of o r c e .
products now being roanulactured i n Greeceand representine about one
t h i r d o f Greekimports frcm t h e EEC, t h e p e r i o d i n which t o reduce t h e
t a r i f f has beenextended up t o 22 y e a r s . With t h e e n t r y i n t o f o r c e
of
t2heagreement,such
t a r i f f s a r e t o be reducedby 5 p e r c e n t , and again
5 percentevery
30 months, for a p e r i o d of 10 yea.rs The t a r i f f s
xis sting a t t h a t t i m e will then be reduced during -the following
1 2 )-ears
iil t h e same aanner a s f o r t h e
goods s u b j e c t t o the 12-year period. The
-_..,
L&C c o u n t r i e s will immediatelyextendtowardGreece
a l l t a r i f f reductions
J-,
t,Lt
c
have been exteaded t o t h e o t h e r members a c c o r d i n g t o t h e provision
LIT t h e T r e a t y o f Rome, o r t h a t havebeen o r will be extended under t h e
speed-upprocedures,,except
for some a g r i c u l t u r a lp r o d u c t s .
Assuming
ti1a.t the Associatiox1 w i l l become e f f e c t i v e dw.-ing 1962.Greek a g r i c u l t u r a l
,?.:r)orts w i l l i m e 2 i a t e l y be granted a t a r i f f preference o f 30-55 per c.ent
'

'

La o r d e r t o assist i n t h e establishKent c , i cew pr3cessing

i n d u s t r i e s and t o f a c i l i t a t e t h e adapLation of t h e Greek econoray t o t h e
Cormon Market,Greece may i n t r o d u c e , r e i n t r o d u c e , o r raise t a r i f f s vis-av i s the EEC c o u n t r i e s . Such t a r i f f s may notexceed 25 p e r c e n t advalorem,
arc
belimi'ced
f o r E p e r i o d of nineyears,
shculd n o ta f f e c t items representing toget;ier m r e thzn 10 per cent of Greek i q o x - t s l r o m t h e EEC
c o u n t r i e s i n 1958, and may not 'se higher than t a r i f f s on t h e s a x e goods
o r i g i n a t i n gi nt h i r dc o u n t r i e s .I n s t e a d
OF r a i s i n g t a r i f f s J Grreece ma)-7
with the agreexent of the Council
of A s s o c i a t i o n , r e - e s t a b l i s h q u a n t i t e t i v e
restrictions, provided the
new quotas are not $elow 60 per cent o f t h e
i n p o r t s o f t h e r e s p e c t i v e c o m o d i t y from t h e ,232 c o u n t r i e s du.rir?g t h e
precedingyear.
All thesemeasures must be eliminated sftm 22 years.
Trzde between Greece and t h e E X s h e l l no:,
ir, pr-:.nn'
"*Llpk,
betlindered-by
q u a n t i t a t i v e i x p o r t r e s t r i c - t i o n s o r equivalent measures.
Nc LICTWi a p c r t r e s t r i c t i o n s shsll b e Introduced, For t h e EEC c o u n t r i e s ,
t h i s prs- cion q p l i e s o n l y u.2 ta -the l e v e l of l i b e r a l i z a t i o n a c h i e v e d
aixor,g themselves. For Greece, it, a p p l i e s t o 60 p e r cerrt ~f i t s p r i v a t e
imports from tile E ~ c
c o u n t r i e s( r e f e r e n c ey e a r
195d). &%er a periodof
fiveyears,thepercentage
i s r a i s e d t o '(5 per cent, end t o 80 per cent
a f t e r a n o t h e rf i v e - > e a r perioci. Greece may r e i n t r o d u c eq u a n t i t a t i v e
EEC
r e s t r i c t i o n s whichhave not Seen farmally l i b e r a l . i z e d v i s - a - v i s t h e
c o u n t r i e s( p r o d u i t s 1ii;er;s Dais non consolidgs), 'out s h a l l , i n t h i s
dEC countri.es representing z t
case,establishregionalquotasforthe
l e a s t 75 per cent o f t k i ~ p 0 1 - tircm
~
t h e Co;mx,mity i n t h e gear prior
t o t h e i n t r o d u c t i o n of t h e aeiri r e s t r i c t i o n s .

56

PrnT I1

d u c t s .A f t e r
a period of 22 y e a r s , q u a n t i t a t i v e r e s - L r i c t i a n s
countries toward Crreek imports must 3 e c o q d e t e l y a b o l i s h e d .

b.; the EEC

Greece s h a l l , o n e y e a r a f t e r t h e e n t r y i n t o f o r c e
of the
agreeroent, establish iniport quotas available to
t h e 3'EC countries without
discrimination for nonliberalized items, equal to the inports effected
from the EEC c o u n t x i e s d a r i n g t h e f i r s t year of the agreement, but
amounti n g t o at l e a s t 7 percentoftotalimports
of Each product,Thesequotas
will b e i n c r e a s e d i n t h e
same manner as t h o s e of t h e EEC c o u n t r i e s de s c-ribed zbove
A l l . measures having the equivaLent effect of
import, quotas
s h a l l be gradually abolished by the
EEC c o u n t r i e s , and b y Greece,andmust
be eliminated after 12 yems.

(2)

Adoption o f co-mon e x t e r n a l t a r i f f

Fol: items s u b j e c t t o t h e 1 2 - y e a r t r a n s i t i o n p e r i o d ,
Greek
t a r i f f s t h a t do n o t d e v i a t e IYom t h e common e x t e r n a l t a r i f f of the EEC
by more than -1-5 per cent, will b e a d j u s t e d to t h e cornon t a r i f f ' a t t h e
time cf it; t h i r d r e d u c t i o n o f t a r i f f s t m a r d t h e EEC c o u n t r i e s . The
illfference of o t h e r t a r i f f s i , r i l l bereducedby
30 p e r c e n t at t h a t time,
and by another 30 p e r c e n t a t t n e t i m e of t h e s i x t h " i r , t e r n a l "
reduction,
Greece w i l l adoptthecomon
t a r i f f a t t h e end of t h e 12-year ~ e i . l o d . A
corresponding procedure a p p l i e s 'LO items s u b j e c t t o t h e 22-year t m n s i t i m
period.
Foi- items representing not imre thzn
5 per cent of t o t a l
Greek i m p o r t s i n 1-958, Greece may postpone the adoption o f t h e comaon
t a r i f f u c t i l t h e end of the 22-year transition
period, a f t e r h a v i n g COEs u l t e d t h e Counci3- of AssociaCion. For i-terns r e p r e s e n t i n g n o t more P
i
tA
3 per cent of t o t a l Greek i m p o r t s i n 1958, Greece inay even a f t e r t h e end
of t h e 2 2 - y e a r t r a n s i t i o n p e r i o d m a i n t a i n
t a r i f f s on iLTorts fron t h i r d
countriesthatarehigherthan
the cormon t a r i f f , a f t e r h z v i n g c o n s u l t e d
the Council ofAssociation,Greece
may e s t e b i i s h l o i j e r o r no t a r i f f s on
i a p o r t s from countries with which it m a i n t a i n s b i l a t e r a l . t r a d e a g e e m e n t s ,
i f t h e a p p l i c a t i o n of t h e p r o v i s i o c s of t h e a s s a c i a t i o n a g r e e m n t m u i d
distlurb the functioning o f suchagreements and s u b j e c t t o p r i m agreewent
of t h e C o m c i l or" Pssocieticn, Scch
t a r i f f concessions may however not be
l o v e r t h a n tariff:; a p p l i e d t o i n $ o r t s from t h e EEC countries, and may n o t
affect more than I--O per cent of t o t a l Greek imports from third cou:ltries,
o r one t h i r d o f the import of each
commodity.

( 3 ) S p e c i a lp r o v i s i o n sf o r

Greek a g r i c u l t u r a l exports

I n o r d e r t o f a c i l i t a t e andexpand t h e s a l e of Greek t o b a c m ,
c u r a n t s , and s u l t a n a s , f r e s h f r u i t ,
wines, o l i v e s and turpeutiiie 3 ~ .t h e
LEC m r k e t , special concessions were g r a n t e d t o Greece as cliscuseedbeLcx-

57

PART I1

(a) Tobacco
Between 1957 and 1961, Greek tobacco exports to the
EEC d e c l i n e d f r o u 56,300 t o n s t o 22,900 tons, while total tobacco imports
o f t h e members o f t h e Community rose from 177,800 t o n s i n 1958 t o 198,900
t o n s i n 1961. This d e c l i n e was notonlycausedby
a general s h i f t away
from orien'ca.1 type of tobacco, but
t o a n even l a r g e r e x t e n t r e s u l t e d f r o m
ZEC fromTurkey,Bulgaria,
Yugoslavia,
increased tobacco purchases of the
and o t h e r c o u n t r i e s .
Tobacco i s one of t h e most h i g h l y p r o t e c t e d EEC products. There are h i g h i m p o r t d u t i e s i n
Germany and i n t h e Eeneluxcountries,
while F r a c e a:?.Italy i q o r t tobaccothrough state monopolies. I n o r d e r
t o proEote the iL:,.;rt of Greek tobacco, the EEC c o u n t r i e s will, ira~nediate1.y
the Association, reduce by 50 p e r c e n t t h e i r i n d i upon e n t r y i n t o f o r c e o f
v i d u a l t a r i f f s on t o b a c c o e x i s t i n g on January 1, 1957. A t t h e same tirae,
t h e members o f t h e Community will continue t o a d J u s t t h e i r n a t i o n a l t a r i f f s
on tobacco t o t h e cornon e x t e r n a l t a r i f f . By t h e endof 1967, a l l i n d i tire t o be abolished, vhile t h e
v i d u a l d u t i e s on theimportofGreektobacco
adoption of t h e :omon e x t e r n a l t a r i f f must be coupleted, As t o t h e c o w tri,es irqorting through state mmopolies, France
will, f o r a p e r i o d o f
f i v e years, maintain annual parchases equal
t o the average of import during
1957-59. As p a r t of t h i s stipulation, the French tobacco
monopoly w i l l
i.unmedia,%elyincrease the purchases
of Greek tobaccoby 10 per cent.
The
ly
the f i r s t five years of
the Association will
I t s l i e n s t a t e ~ c x n o ~ o during
iLgort Crou Greece a t least 60 p e r c e n t o f t o t a l o r i e n t a l t y p e t o b a c c o
Greek
i q o r t s , p r o v i d e d this m o u n t s t o a t k a s t $2.8 m i l l i o n .I a p o r t so f
tckacco by S t a t e Konopolies are t o be i c c r e a s e d i n r e l a t i o n t o r i s i n g
im-arts by t h e o t k e r EEC c o u n t r i e s ,

On t h e f o r u u l a t i o n and modification of the common

agricul-cu.ra3. p o l i c y and t h e c o m o n e x t e r n a l t a r i f f on tobacco, Greece has
b e e ng r a n t e dc e r t a i nv e t or i g h t s .
The common a g r i c u l t u r a l p o l i c y on
o r loodified only with unanimous agreement of
tobacco can be established
the CouncilofAssociation.
Such agreeaent i s a l s o requiredforchanges
i n t h e comon t a r i f f on tobacco exceeding 20 p e r c e n t ad valorem and io per
cent of s p e c i f i c d u t i e s , as well as i n t h e e v e n t o f
a p a r t i a l o r complete
suspension of t a r i f f s ,
(b)

Currants and! s u l t a n a s

In 1960 t h e EEC countries bought sone

37 per cent of
Greek s u l t a n a e x p o r t s , and some 18 per cent ofGreek currant exports.
With t h e e n t r y i n t o f o r c e o f t h e A s s o c i a t i o n ,
EEC mernbers w i l l reduce
immediately by 50 per cent t h e i r n a t i o n a l t a r i f f s on currants and sultanas.
s i x years, by whichtime
duch t a r i f f s w i l l be c o q l e t e l y a b o l i s h e d " t h i n
t h e co*mon t a r i f f i s t o be introduced.
Greece has been granted veto righf,s
on z o d i f i r - a t i o n s
of the comon t a r i f f s on c u r r a n t s and sultanas exceeding 20 per cent ad
valoremand
i n the case o f p a r t i a l cr completesuspensionof
tariffs.

- ?a ( cF) r e s h

PART I1

fraits
I

&Thecomrcon t a r i f f on f r e s h f r u i t s e s t a b l i s h e s compet i t i v e advantageforGreecevis-a-visimports

from t h i r dc o u n t r i e s .S i n c e
%he EX! countries themselves however also produce fresh f r u i t s , t h e k s s o c i f o r t h e p o s s i b i l i t y t o r e s t r i c t f r e s h f r u i t imports
ation Agreeaent provides
frola Greece beyond c e r t a i n minimum quotas i f such imports create serious
E E C member countries. The mhixum
d i f f i c u l t i e s f o r similar e x p o r t so ft h e
quota for citrus fruit
i s 22,009 t o n s (EEC imports o f c i t r u s f r u i t from
tons
Greecebetween i957-60 averaged soire 5,OCO tons), for grapes 15,000
(EEC i q o r t s averaged 6,000 tons from Greece), and peaches
40,COO tons
(EEC imgorts averaged 16,000 t o n s from Greece).

w i n e s ,o l i v e s ,r e s i n
ii.

Special provisions apply also

and turpentille.

t o EEC i n p o r t of Greek

Prorlotionofecononicunion
-

The t r e a t y also includes most of the other elements

of the Treaty
of Roae, alti?oughin some cases it d o e s n o t s t i p u l a t e f i x e d o b l i g a t i o n s .
rn
..hese e l e x e n t s i n c l u d e f r e e movement of workers, t o b e i n t r o d u c e d a t t h e
end of t h e t r a n s i t i o n p e r i o d ,

a liberalization of the
l m s concerning the
e s t a b l i s i m e n t 0: business f i r i n s and of t h e z o v e a e n t o f c a p i t a l , r u l e s
of
e m p e t i t i o n ,e t c .

iii. F i n a n c i a l a s s i s t m c e

Greece may obtain frox the Cowunity development

loans i n t h e
a x o m t c f SoGe $125 m i l l i o n t o be used for imports o r l o c a l e q e n d i t u e s
ddring t n e first fi.ve years o f theAssociation.
The loans a e , as a
r u i e , t o be channe?.ed t h r o u g h t n e EuropeanInvestment Eank and s h a l l be
x i b j e c t t o i t s rules and p r a c t i c e s . The lamimum period f o r i n d i v i d u a l
loans i s 25 years. The l o a n s a r e t o be reimbursed i n f o r e i g n exchange.
The i n t e r e s t r a t e s . h a i l be t h a t g e n e r a 1 l ; r q p l i e d by the E u r o p e m InvestzientEmk
at thetimeofthecmclusion
of t h e lgan agreemeuts,but -the Commnity
may s u b s L d i z e t h e I n t e r e s t payments by c o n t r i b c t i n g 3 per cent per a n n m
on loans outstar1dir.g (up to
a t o t a l of $83.2 m i l l i o n ) if t I - z p r o j e c t r e Quiressuchassistance.
The loans a r e t o h e l p t h e
f!-nancing of land
improvement, road tluilding, o r power development.

59

PAi?T I1

7- . -"R e s t r i c t i v e Sy-stern
a.

The exchange rate

S i n c e L p r i l 9 , 1953 t h e o f f i c i a l rate hasbeen D r 30 p e r U.S. dollar.

The Fund c c n c w r e d t o t h e e s t a b l i s h c e n t o f t h i s rate as t h e i n i t i a l par
value f o r t h e Greekdrachmaon
idiarch 29, 1961. The buying rate i s D r 29 .Z5
an6 tile sellin;: rate i s D r 30.15 p e r U.S do1la.r. iktrket rates
f o r convertible or externally convertible currencies are fixed
by t h e C a n k of
Greece r7lthin a range resultin;:
fro12 t h e o f T i c i a 1 limits f o r t h e U.S
dollar
i n Greece i n r e l a t i o n to the limits o t h e d o l l a r i n t h e c o u n t r y c o n c e r n e d .
Ciscounts and premia are a p p l i e d by t h e Eank of Greece t o t r a n s a c t i o n s
s e t t l e d t h r o u g h t k e Greek-United Lrab RepuSlic clearing account,
i n order t o

liq-uidate frozen Greek c r e d i t s .

b.
Xocresidect
accounts
l,!onresidents are pemitted to
open with Greek bml,;s c o n v e r t i b l e
Foreis: Sigh?; i k p o s i t l i c c o u n t s i n c?ruchxrias or i n c o n v e r t i b l e c u r r e n c i e s .
T'hese accounts m y be c r e d i t e d w i t h c c n v e r t i b l e foreiga exchange or t h e
proceeds 02 s a l e s of such currencies, r r i t h t h e f o r e i g n exchange or d r a c b
e c p i v a l e n t of f o r e i g n c l a i r x a r i s i n g from imports or t h e p r o v i s i o n of
s e r v i c e s t o Greecepayable i n c o n v e r t i b l e c u r r e n c i e s , and r r i t h t r a n s f e r s
fi-ors otherForeignSightEegositAccounts.
The accounts m y be debited,
tritl;out p e r u i s s i o n , f o r p a y a e n t s t o r e s i d e n t s ,
lor transfers to other
P ' o r e i g S i g h t Ceposi-k r'iccounts, and f o r Furchases and t r a n s f e r a b r o a d of
any curreocy ia the ca.se of dracbma accounts, o r f o r t r a n s f e r s a b r o a d i n
t h e currency of' t h e a c c o u n t i n t h e c a s e
of f o r e i g n exchangeaccounts.
Any
with3iraml lrom drachm accounts f o r u s e i n Greece,andanyconversion
of
f o r e i g n exchange vithdrarrals into dracluna, results in
a loss of t h e consums nay therefore not
be
v e r s i o n r i g h t of t h e suns vithc;lratm.Such
c r e d i t e da g a i n to t h 2 d e p o s i t o r ' sn o n r e s i d e n ts i g h td e u o s i ta c c o u n t .
The
n?a:rimm :ate of i n t e r e s t on sucha.ccounts i s 1.;perceEtper
annum. Nonr e s i d e n t s e n j o y i n g the p r i v i l e g e s of k g i s l a t i v e Decree XO. 2687 ( s e e
be2o;r under Capital) may a l s o e s t a b l i s h t i n e d e p o s i t s f o r a uinirfim period
of s i x months and a rnini!!lrun d e p o s i t of the equivalent of c$LO,CCO i n conv e r t i b l ec u r r e n c i e s )e a r n i n gi n t e r e s tb e t v e e n
k acd 5 p e rc e n t .P r i n c i p a l
and i n t e r e s t are f r e e l y t r a n s f e r a b l e i n the currency of t h e d e p o s i t .
i.11 d r a c h m assets o f n o n r e s i d e n t s , o t h e r t h m t h o s e
i n Foreign Sight
CepositAccounts or tine deposits under
larr 2687, have t o be declared and
held i n blockedaccounts.Subject
t o t h e approval of t h e exchange c o n t r o l
a u t h o r i t i e s , b a l a n c e s on these accounts m y be u t i l i z e d f o r such purposes
as personal expenses in Greeceup t o s p e c i f i e d anounts, .thepurcilase of
s e c u ; - i t i e s l i s t e d on the Athens Stock 2:change, and the purchase
of r e a l
e s t a t e i n Greece. i3locked balances ?nay be deposited witL 8 c o m e r c i a 1
bank s.s s i g h t d e p o s i t s wh3se t h e y e a r n c u r r e n t i n t e r e s t .

- 60 C.

R U T I1

Prescription of curency

Settlernents o:n account of merchandise transactions and i n v i s i b l e s

w e made on t h e b a , s i s of t h e o r i g i n o r d e s t i n a t i o n
o f t h e goods and
s e r v i c e s Fnvolved or i n t h e c u r r e n c y and manner p r o v i d e d f o r by t r a d e
and payments a g e e . a e n t s . Under theterms of m s t of the b i l a t e r a l

agreements(see pa2:se 6 4 ) , s e t t l e m e n t sa r e made throughcontrolled

accounts iiith tne 2 . S . d o l l a r or the cuxrency of the pzrtner country
as t h e unit OZ a c c m n t .
d.

Imports and import

payments

o r authorization. %.e
p e r a i t i q l i e s a l l o c a t i o n of the required foreign
f r o a imports for which s p e c i a l l i c e n s e s Z L ~required,
exchange,Apart
one of two general import procedures
i s applicable t o p r i v a t e i q c r t s ,
mainly f o r s t z t i s t i c a l purposes ;
A l l i l n p o r t se r es u b j e c tt op r i o ra p p r o v a l

granting of anlrnport

(1) Under Procedure E, no l i c e n s e i s necessary, but t h e

approval of an authorizedbank i s required, t o i q o r t gocdsfrom

b i l a t e r a l payment agreement countries

when p a p e n t i s t o be made

through t h e r e l e v a n t c l e a r i n g a c c o u n t ;
o r from Z M c o u n t r i e s when
p y a e n t i s t o be rmde i n a c o n v e r t i b l e o r an e x t e r n a l l y c o n v e r t i b l e
Elropeas currency; o r from Canada o r the United States
77hen paynent
i s t o be made i n f r z e dollars, l e e . , not on t h e basis of Procurement
Authorization under U.S.

aid.

( 2 ) Under Procedure TI,

i q o r t approvalissuedbythe
main
o f f i c e o f t h e Bmk ofGreece i s required f o r importsfromcountries
speclfied in Frocwenent Authorizatiors covering inports finance6 by
U.S. aid, a d for ilnports from any other countqy when t h e method of
s e t t l m e n t C i f f e r s from thosementionedunder
(1) above.

Special licenses ere required

f o r imports or i t e n s or, two
l i s t s , A a d 3. List A c o n p r i s e s , c e r t a i n luxury i t e m s , t e - r t i l e s asd
zutomoblles and p a s t s , and c e r t a i nf o o d s t u f f s ,e t c .
W1 impcrts on
L i s t A require pri.or approval of a specie1 committee at t h e Athens
Chamber of Commerc:e and I n d u s t r y r e g a r d l e s s of method ofpayment.
Imports of c e r t a i r . t y p e s of machinery and machinery spare parts are
included i n
L,ist, B, and r e q u i r ep r i o rl i c e n s e s
from the Ministr;; o f
Industry, which are i s s u e d o n l y r e s t r i c t i v e l y . I a p o r t s
o f petroleurn
products similar t , o those produced by t h e Greek o i l r e f i n e r y r e q u i r e
p r i o r l i c e n s e s from theFIinistryofTrade.Specialregulztionsgovern
imports o f a f e w other items, such
as goods under monopoly c o n t r o l ,
medicines, wheat and f l o u r , r i c e , s u l p h u r 2.nd motionpictures.
P a p e n t f o r iq0rt.s may, as a g e n e r z l r u l e , be m d e i n one
of tifo ways: (a) byopening a d o c m e n t a r y l e t t e r of c r e d i t , 01
(5) against p r e s e n t a t i o n of shipping docments.

A.
of

41

All i n p o r t s may be p a i 6 for by a l e t t e r of credit, but the opening

l e t t e r o f c r e d i t i s o b l i g a t o r y for c e r t a n gcodscontained i n L i s t

Thisimpliesthattheimporter
deposi-Ls i n drachmas with h i s bank
t h e 17hOle amount o f t h e c r e d i t .
If theimgort i s made underProcedure
E, t h e drachma e q u i v a l e n t o f f o r e i g n exchange must be p a i d a t the time
that a2proval t o import i s given; if the import i s made underProcedure
D, payment must be made within 20 days from t h e i s s u a n c e o f t h e i n p o r t
approval.

Payrnents for imports against presentation of shipping docments are

p e r m i t t e d i n two ways, i .e
c a s h a g a i n s t s h i p p i n g documents ( s i g h t
d r a f t ) o r on a d e f e r r e d payment basis (time d r a f t ) . I n p o r t s on a d e f e r r e d
285 p r o d u c t s c o n t a i n e d i n s p e c i a l
lists.
payment basis are allowed for
Ssrm, 1-5'7import items on EL l i s t P-3 can be paid for
by means of 90-day
drafts, and items on
l i s t P-6 (about 100 items,mostly raw m a t e r i a l s ,
xachinery and lubricating oils)
can be paid for
w i t h 36O-day d r a f t s .
Tor certain tyges of machinery, accessories,
and s p a r e p a r t s , payment
m y be made by means of 36-aonth drafts. The liiinister o f Coimerce mey
authorize even longer payment p e r i o d s , and he may approve paymenton a
fieferred payment basis f o r i n p o r t s which are not included
in the s p e c i a l
lis-hs.

.,

For goods imported on a s i g h t d r a f t basis, a Greek importer must

d e p o s i t w i t h h i s bank a?l m o u n t i n c a s h e q u a l
t o 50 per cent (F-50 l i s t )
or 100 per cent (F 1CO l i s t ) of the invoiced value, depending
on t h e
c o m o d i t y to be imported, except for certain commcdities (zsinly
foods t u f f s ) * Inaddition,import,ershave
to d e p o s i t 20 per cent or
40 p e r
cent of the c.i.f. value of the iinport
as sectirit;. f c r import duties
snd ot'ileT charges.

i?d?rance d e p o s i t s o r bank guarznteesarenotrequired

on shipments
Faid for through the opening of documentary credits, except
for imports
included ir! l i s t F 100 f o r which a 40 per cent guaraztee
i s required 6 s
securi-ty f o r t h e payment ofcustoms d u t i e s and othercharges.Imports
against t h e d r a f t s a r e n o t s u b j e c t t o
advance deposits but
a I;ersonal
guaTarstee e q u i v a l e n t t o 8 p e r c e n t of t h e c . i . f v a l u e o f t h e
goods t o be
1
L q a r t s d i s required. For c o m o d i t i e s f o r i;hich foreign exchange i s
providedby U.S. aid, importers must d e p o s i t , w i t h i n 10 days f r o m the
( l a t e o? the issuance of the import approval,
c ce31.1 o r a bmik
g l a r r n t e e c o v e r i r g 10 per cent o f the value or' t h e goods, i n a a d i t i o n t o
eny 3 t h e rd o m p a p e n tr e q u i r e d .
Also, all t e x t i l e i i o r t s , r e g a r d l e s s
o f %he way t h e y a r e p a i d f o r ,
are s u b j e c t t o a n advance paymentof
280 $er cent o f t h e c .i .f value. If the import i s pzyable by s i g h t
d r a f t , t h e deposit must be made a t t h e t i m e t h e goods are ordered, if
payable through the opening o f a docunentary l e t t e r o f c r e d i t , t h e
importer nwt deposit with his
bank the c.i.f. value
o f the import Plus
180 per cenf of t h i s v a l u e .
.?i

- 62 -

PART IL

A f t e r making arrangements for paymentandupon

d e l i v e r y of t h e
shippingdocuments, t h e i m p o r t e r ' s bank i s s u e s a p e r n i t f o r t h e customs
If the
c l e a r a n c eo ft h e
goodsand t h e advancedepositsarerer'mdea.
i q o r t e r fails t o f u l f i l l t h e c o n d i t i o n s p r e s c r i b e d
for the import o r
pajment o f t h e goods, a f i n e o f up t o 25 per cent of the c.i.f. value
o f t h e goods i s payable. Greek importers who place orders abroad prior
t o t h e i s s u a n c e of an ixfport permit may also be subject
t o a f i n e of up
t o 25 p e r c e n t of t h e c , i . f value of t h e goods.

Special regulations govern imports

and p u b l i c comganies.
e.
Exports

by s t a t e a g e n c i e s , l e g a l e n t i t i e s ,

mdexportproceeds

All exports are s u b j e c t t o i n d i v i d u a ll i c e n s i n g .

The l i c e n s i n g
authority has, in general,
been delegated t o t h e Bank of Greece i n o r d e r
t o c o n t r o lt h es u r r e n d e ro ft h ee x c h a g ep r o c e e d s .Q u a n t i t a t i v el i m i t a t i o r s 01- p r o h i b i t i o n may b e a p p l i e d o c c a s i o n a l l y t o
some exports (e.g.,
oliveoil,scrapiron)inordertoensureanadequatedomesticsupgly.
Proceeds from exports
must be surrendered t o t h e Bank of Greece within
f i v e months from the day of the export.
f

Invisib:Les

Payments f o r i n v i s i b l e s r e q - u i r e i n d i v i d u a l l i c e n s e s , b u t t h e s e a r e
g r a n t e a f r e e l y f o r expenses incidental to authorized trade transactions
and forcertainochertransactions.Transfersabroad
on accountof
specifiedcategoriesofinsurance
(e.g.,shipping,aviation,merchandise
transgort, fire, accident
and l i f e ) are authorized by the
Bank of Greece
up t o s p e c i f i e d p e r c e n t a g e s of t h e amounts owed.
Greek residents going abroad for family reasons,
tourist trzvel,or
busir,ess zre e c t i - b l e d to t h e equivalent of US$l'jO p e r t r i p . E x p o r t e r s
and mmufacturers are allowed $20 a day for a maximm 0 2 45 days when
t h e y go t o t h e U n i t e d S t a t e s ,
Canada, o r t h e F a r East; f o r t r a v e l t o a l l
o t h e r c o u n t r i e s , $he amount i s $15 a dayfor a maximum of 30 days. Requests for larger mounts or
from otherbusinessmen,commercialrepresentatives,etc.,
axe s u l m i t t e d t o the Foreign ExchangeSubcommittee.
Persons travelling abroad
may take with them a m a x i m u m of Dr. 2,000 i n
Greek banlrnotes.
Exchange r e c e i p t s r e p r e s e n t i n g payments f o r s e r v i c e s l u s t b e
surrendered.Foreignexchangeproceedsfromshippingareexeiqtfrom
the surrender requirement, but shipolrners have
t o pay for supplies,
repairs,etc.,
and any taxes and fees, and must c o v e r t h e i r d i s b u r s e sale
mentsandexpense:;
i n Greece i n l o c a l c u r r e n c y o b t a i n e d t h r o u g h t h e
of foreign exchange t o t h e Bank ofGreece.Nonresidenttravellers
of
foreign nationali-;y need n o t d e c l a r e t h e i r f o r e i g n
exchange a t t h e t i n e
of entering the country
and nonresidents holding Greek passports iLust
d e c l z e t h e i r f o r e i g n exchangeonly if t h e y i n t e n d t o t a k e o u t a g a i n
foreignbcmknotes,,exceedingtheequivalelzt
of $500. D r . 2,000 i n Greek
badmotes mqy be brought into the ccuntry.

g.

63

PART I1

Capital

Trmsfers o f capit&labroadrequireapproval.
Greek r e s i d e n t s may
r e p a t r i a t e t h e i r c a p i t a l which i s held abroad i n t h c form o f gold o r
Zoreign exchange. Repatriatior,offoreignexchmgebalancesheldby
of goods r e q u i r e a s p e c i a l l i c e n s e from
residents through the irnportation
the Xinistry of Trade.
Under LegislativeDecree No. 2687 o f October 31-, 1953, approved
foreign investments in Greece t h a t a r e e x p e c t e d t o
proixote production or
o t h e r i r i a e c o n t r i b u t e t o t h e economicadvanceEentof
the country may be
gran5ed p r e f e r e n t i a l t r e a t m e n t , i . e , , t a x , t r a n s f e r and o t h e r p r i v i l e g e s ,
but such investxents
may not be r e p a t r i a t e d e a r l i e r t h a n one year from
t h e d a t e o f i q o r t a t i o n o r from t h e t i a e t h e e n t e r p r i s e began t o o p e r a t e
is
p r o & i c t i v e l y , When s n y e n t e r p r i s e o r g a n i z e d w i t h f o r e i g n c a p i t a l
granted terms m r e f a v o r a b l e t h a n t h o s e e c c o r d e d t o
a similar e c t e r p r i s e
p r e v i o u s l y e s t a b l i s h e d witn f o r e i g n c a p i t a l , e q u a l l y f a v o r a b l e
terms wili
be exte-r?ded t o t h e p - e v i o u s l y e s t a b l i s h e d e n t e r p r i s e s ,
at the request of
t n e beneficiary.Speci&guaranteesareprovidedincaseofrequisition.
I-av Xo. 4171/1$61 p r o v i d e s f u r t h e r p r i v i l e g e s f o r f o r e i g n c a p i t a l i n v e s t e d
inprodxtiveprojectsinaccordancewithLegislativeDecree
No. 2687, i f
thevalue of suchinvestmentsexceeds
Dr. 90 m i l l i o n ($3 r a i l i i c n ) . Approved
f o r e i g n c a p i t a l may be r e p a t r i a t e d a t an annual rate not exceeding
10 per
cent.Dividends
on equity capital not exceeding
12 per cent EL year and
payments o f i n t e r e s t on loan capital not exceeding 10 per cent a year may
be f r e e l y t r a n s f e r r e d .
Annual earnings below t h e s e limits nay Sesuppleaented by e a r n i n g s i n e x c e s s of such limits from other years.
tinder Decree No. 2667, t h e p r i v i l e g e of t r a n s f e r r i c g p r o f i t s i s r e iated t o t h e r e s i d n a l c a p i t a l r e m a i n i n g i n G r e e c e ,
and t h e t r a n s f e r
been r e p a t r i z t e d . Urder
p r i v i l e g e e,xpil-es as soon as a i l t h e c a p i c a l h a s
L a v ?Io. 4171, enterprises i,Jhich under the provisions of Cecree
No. 2687
havein-rested foreign c a p i t a l of n o t l e s s then Dr. 90 l i l i l l i o n i n s p e c i f i e d
ts t r a n s f e r a b r o a d p r o f i t s up t o 6 p e r
productive projects, are permitted
of p r o f i t s
cent annually of repatriated capital, provided that the mount
t o be remitted each year does not exceed
8 per cent of the foreign
exchange
earnings o f t h e e n t e r p r i s e .
T h i s r i g h t d o e sn o te x p i r ea f t e rr e p a t r i a t i o n
of the imported capital.

Deviations from tine g e n e r a l r e g u l a t i o n s m y be zpproved f o r f o r e i g n

capital imzorted t o d e v e l o p e s y o r t s o f a g r i c u l t u r a l
wLd mining products
or i n v e s t e d i n e n t e r p i s e s o f s p e c i a l i m p o r t a n c e t o
t h e economy.
Decren No. 2687 a l s o exempts the extension and s e r v i c i n g o f any
f o r e i g n l o a t o local manufacturing o r mining e n t e r p r i s e s from every kind
ofcharge
by t h ep u b l i ca u t h o r i t i e s ,S p e c i f i e df o r e i g ns h o r t - t e r mi n v e s t ments may a i m be g r a n t e d p r e f e r e n t i a l t r e a t a e n t i n r e s p e c t o f t h e
rep a t r i a t i o n of c s p i t a l and the t r a n s f e r of i n t e r e s t .F o r e i g ni n v e s t o r s
may a l s o i n v e s t c q i t a l i n b u s i n e s s v e n t u r e s w i t h o u t
following the procedures o f Decree No. 2687, b u t i n t h i s c a s e , a s p e c i a l a d v i s a b i l i t y

- 64 -

PART I1

license nust be obtained

from t h e M i n i s t r y of Industry, and t h e r e zre no
t r a n s f e rg u a r a n t e e s on c a p i t a l or p r o f i t s . T r a n s f e r s
of capitalabroad
by residents requi.re approval.

h,

Payments
agreements

Greece rraintains bilateral trade

andpaymentsagreementswith
five
Fundmembers
(Brazil, Finland, Israel, Yugoslavia,anatheUnited
Arab
(Eul-aria, Czechoslovakia, Zest
Republic) and sevenSovietbloccountries
Gerzany, Eungary, Rumania,and
t h e U.S.S.R.).&?
The agreementwith
a monthly s e t t l e m e r t i n c o n v e r t i b l e c u r r e n c y 02
Yugoslavia provides for
20 percentofYugoslavia'sreceipts.
The agreementwithFinlandstipubeyond t h e c r e d i t margin
l a t e s t h a t 50 per cent of balances outstanding
of $750,000 a r e t o be s e t t l e d i n c o n v e r t i b l e c u r r e n c y e v e r y f o u r E o n t h s .
The agreeEent with Israel p r o v i d e s f a r a swingmargin o f $l5O,OCO.
Paymentsagreementswithinthe
framework of t h e EuropeanI4onetary
a l l EXA countries except the United
Agreement e x i s t betweenGreeceand
Kingdom.The
purpose o f maintainingtheseagreements
i s t o make use of
t h ef a c i l i t i e sp r o v i d e du n d e rt h e
EbR f o r i n t e r i m f i n s a c i n g . I n o r d e r
not t o rmke s e t t l e m e n t s a t p e n a l t y r a t e s , t h e Bank or' Greece usually
repays credits received from the
o t h e r EivA p a r t n e r s j u s t b e f o r e t h e
enci
cftherronthlysettlementperiod.Specialarrangementsexist
with Norway,
P o r t u g a l andTurkey, i n t h a t c r e d i t s t o b e u t i l i z e d byGreece are i n t h e
n a t u r e o f a l i n e of c r e d i t r a t h e r t h a n c r e d i t
opened i n f a v o r of Greece
at the beginning of each month,and t h a t Greece does not pay interest
on
such credits.
Balaaices outs'tanding onpayment
AFpendix, Table 8 ,

agreements are

shown i n t h e

Specialarrarigementsexistwiththe
U-U. A s a r e s u l t of c a p i t a l
t r a n s f e r s t o Greec:e byformerGreek
r e s i d e n t s of the UAR, t h e r e a r e
l a r g eo u t s t a n d i n gb a l a n c e si nf a v o r
of Greece. An agreementconcluded
i n 1958 provide& for pa-pents by t h e URR of the balance outstanding a t
t h a t tiEe o f $17 m i l l i o ni ni n s t a l l m e n t si nc o n v e r t i b l ec u - r e n c y .I n
1962, t h e Greek Gc'vernment agreed t o payment o f t h e l a s t t r a n c h e p a y a b l e
The Greek-UAR payments
on June 15, 1962 m e r a p e r i o do ft h r e ey e a r s .
agreement provides a l s o for a swingmargin of EE 1.5 m i l l i o n a d t h e
settlercentofanyexcessinconvertibleforeignexchange.
A s thebalance
i n f a v o r o f Greece approached once again the margins provided under the
agreement, the UAR i n e a r l y 1962 stopped all f u r t h e r i m p o r t s o f goods
and s e r v i c e s fromGreece.
A s w a y of" the provisions of these agreements
Appendix, Table 9.

i s given i n t h e

65 -

PART I1

I n c r d e r t o f a c i l i t a t e GxeeB t r a d e a d t r a n s f e r s fron t h e UP&, Greek

imports from t h e UfiR are subsidized by the Bank of Greece. I n order t o
finance t h e s u b s i d i e s , s u r c h a r g e s a r e l e v i e d
on Greek e q o r t s t o t h e UAR
arid on proceeds of Lnvisibles,and losses which t h e Bank of Greece may
i n c u r on these o p e r a t i o n s a r e met by t h e Government budget.
The 3ank o f Greece s e l l s Eg;YPtia.n pow-ds a t discounts up t o 25 p e r
cent of t h e o f f i c i a l exchange rate, depending on t h e t y p e of t r a n s a c t i o n .
Discounts applied t o conversion of Egyptian pounds i n t o drachmas in 1961,
were 5 per cent for proceeds of tobacco exports,
15 t o 20 p e r c e n t f o r
o t h e r majorGreek export items, and 30 p e r c e n t f o r
all other exports.
Discounts appiied to remittances
frou i n v i s i b l e t r a n s a c t i o n s r a n g e f r o m
15 to 30 percent.Accordingtorecentreports,thesediscounts
were
changed e f f e c t i v e A p r i l 1, 1362. Henceforth all major exportitemsare
s u b j e c t t o a discount of 20 p e r c e n t , while a 30 per cent discount i s t o
be applied t o thereminder,Discounts
on r e c e i p t s from i n v i s i b l e s
remain at 1 5 t o j0 per cent, depending on t h e t y p e o f t r a n s a c t i o n .

66 -

Government'sCurrentAccount
f o r the
financing of consumergoods:
1. Payment i n domesticcurrency
For o f f i c i a l p u r c h a s e s of t h e following agricultural products:
Wheat
Olive o i l
Rice
Other products

I.

2,

Subsidies paid to cotton and pulses

prcducers
Other p q m e n t s
Payments in foreign exchange for
purchases from abroad

3.

Total Payments

4.

Beceipts
From sa:le of goods
Frcm t i 2 b u d g e t a g a i n s t a c t u a l d e f i c i t
Other r e c e i p t s
Ovel*draft,s of t h e year (3-4)

5.

774

I,486
I,410

4
33
39

2,554

2,146
1,827
240
25

54

1,288

219
18g

536

977

3,3 - 0

3 5317

11- Accounts of t h e Union of Cooperatives of Sultana

Producers an6 t h e Autonomous Organization f o r
Currants
Payments
Receipts

Overdrafts of t h e y e a r

111, Agricultural banks Account f o r t h e financing o f

state tobacco p n n hases
Paymen-ts
Receipts
Overdrafts of the year
T o t a l overdrafts

Source: Informationsupplied by t h e Greek a u % h o r i t i e s , (Ranlr of G

f2

r
L i s t e d i n the gevious year budget.
Including D r 5'7 million t r a n s f e r r e d from t h e budget t o cover the crcp

d e f i c i t 0 3 1959.
3.-I/ I n c l a d i n g t r a n s f e r s of D r 50 million l i s t e d i n 1958 budget,.
4/ I n c l u d i n g t r a n s f e r s of Dr 160 m i l l i o n listed in 1959 ( D r 100 m i l l i o n ) and
1960 T D r 60 m j l l i o n ) budgets.
5/ Including tran:;fers of D r 140 millim l i s t e d i n 1960 (Dr 40 m i l l i c n ) and
1951 TCr 100 million) budgets.

Table 2.

67

Revenues and Expenditures

. .. .
of R a i lways
( I n mil-lions of drachmas)
-"

Eevenue s

"

Revenue from esyrl.oitation

394
Revenw from p r o p g r t y
4
Social s e c u r i t y contribution
26

Other

Total

427

ExpendTtures

"

Xages and s a l a r i e s
Employers' contribut i o n to sccial sec.
Pensions
Gzgcral expe,,nses
Meintsnance e x p x s e s
Constructlcn
Payment of t a x e s

Other

Total

Deficit
S t astueb s i d i e s

Source:

29d
22

147
142
35
31
11

5
712
-285
4315

GeneralAccounting

Office.

5/ Greek State Railways.

f
2 Railways of Piraeus-Athens-Peloponese.

?mT I1
APPENDIX

- 68 Table 3.

Balance of P a p e n t s

( I n m i l l i o n s o U.S.

A. Goods and Serv:ices

Exports, f .o.b.
Imports, f .o.b.

1960

1961

212.5

208.6
-473 7
-265.1

234.3
-532.4
-298.1

165.0
63.2

Receipts on s e r v i c e s
Transportation
Trave 1
Government, n. i. e.
Other

41.7
25.5

34.6
-37.2
-49.7
-15.4

Payments on s e r v i c e s
Transportation
Travel
Goverrment, n. i .e.
Other

-1C.3
-21.8

67.8

Net s e r v i c e s

-141.4

Net
goods
and
services
3. PrivateTransfer

189.2
76.5
51.4
30.8
30.5

-111.6
-55.E?

-18.8
-12.3

-24 7
77-6

-187 5

231.8

102.1

68.1

27.1

34.5
-128.8
-64.0
-19.3
-12.4
-33.1

103.o

-195.1

88.6
42.8

O f f i c i a l T r a n s f e r Paymentsand
( o t h e r t h a n Groups E and F )
Reprations
Official loans and repaymezts,
( o t h e r t h a n Group E )
Other c a p i t a l rr,ovements

Capital

net

0.8

0.9

1.2
-

25.0

D. T o t a l (A through C )

15.0

E. Economic Aid

MSP g r aoantn
rhtedsel ire f
U.S.i n l o a n s
drachmas
U.S. Government d e p o s i t si n

2.8
21.0

Tot a , l

Total

Payments and Capital

Transfer payments
Capital

C.

dollars 1

1959
-421.7
-209.2

balance
Trade

1959-61.

drachmas

43.9
16.7

-6.0
-

54.6

36.0

9.8
7.6
51.4

31.6

15.2

-2.3
-

44.5

(continued)

- 69 T t L l e 3 (continued).Balance

( I n m i l l i o n s of U.S.

I;

I?@ c o s i t i o n

Total
G. Xet errors and omissions

For

dollars)

yioLle
., t a r y iv1otremnts
1J.K. s t a b i l i z a t l o n l o a n a d j u s t rnents
Fayments agreements, ne%
Comrcercial bank a s s e t s ( i n c r e a s e - 1
Ea& of Greece a s s e t s ( i n c r e a s e - )
Monetary g o l a ( i n c r e a s e - )

1-959-61

of Payments

-15.C

-5.5
-0.9
-0.8

-31.3

-s.9

-2.8
10.6
-3.L:

37.3

-62.5

-50.5
-8.8

-7.1

5.5

...

0.6

...

-16.2

-10.8
-

-26.4

-12.5

Source: For 1959-60, IIJF Balance of 2ayments Yearbook, Volme i3.

1961, d a t a reported by t h e Bark of Greece.
9Frelirninary.

- 70 Table

Cormodit;r D i s t r i b u t i o n of Imports1/

I n thousands of U. S. d o l l a r s
OEEC
Code No.

Co~nmndlty

1960

1959

1961

GROUP OOCO
AGRICUL-L
PRGDUCTS ?RIIVIPJlILY FCR
HUMAN CGNSIJMFTION:
Wheat
Wheat flour
Corn flour
Fats and butter
O i l seeds
Other f a t s and o i l s
Refined sugar
Fresh meat
Frozen and canned meat
Mi&, evaporatedandcondensed
or dried skimmed milk
Cheese
Coffee beans
Fish, fresh, frozen, smoked, d r i e d
and canned
Eggs
Potatoes
Other vegetables, dried! f r u i t s
and & h e r f r u i t s

Alcoholic beverages
Rice
Pulses
Cocoa i n beans
Miscellaneous food products
T o t a l Group 00G@

GRCUP 1000
AGRICULTURAL FRODLLCTS F R I W J L Y MCT
PCR HUMAM C ONXUT~FTIOTLJ
:
Corn
Gther c o a r s e g r a i n s
Fish meal
Molasses
Live animals
Miscellaneous inedible animal
products
T o t a l Group 1000

I,924
1,307

887
449
644

249
5,460

7,721
3,909
1,296

6,634
4,618
1,564

1,270

2,459

557

249

15,002

68

273
15, 616

( conticued)

'Tzble 4

OEEC
Code Xo.

71

PART I1
APPENDIX

(continued), Commodity D i s t r i b u t i o n of ImportsL//

commodity

1-95?

1960

1941

G R O W 2000
CBMICALS A N 3 CHEMICAL PR ODUCTS:

210G

2220
2230
22L!.O
2240
231
2312

2360
2 370

2390

Fertilizers
Alcohols
Zssential o i l s
Sulphur
Copper sulpha-te
Soda ash
Causticsoda
Chemical s p e c i a l i t i e s a n d p h a r n a ceuticals
Pigmects, Faints and varnishes
MisceLlaneouschemicalsandchemical
preparations
T o t a l Group 2000

20 788

435
341
347
e49
580
724

9,99150,558

GEICUP 3000
FUXLS, PETROLZUM PRODUCTS', ELECTRICITY:

3810
3833

Hard coal
Coke
Crude o i l
Aviation gasoline
Kerosene
Gas &Lese1 o i l
Fuel oil
Lubricants and greases
Asphalt
Miscellaneous petroleum products

77
32

T o t a l Group 3000
CXICl.JP 4000
FERRCUS AND NON-FERRGUS CIRES AND METALS:
Pig iron and ferro-alloys

Crude s t e e l and semi-finished

Hot f i n i s h e d steel
End products
Copper and copper a l l o y s
Tin and t i n a l l o y s
Lead a n d l e a d a l l o y s
Zznc and zinc alloys
Nickel and nickel
alloys
Othcr non-ferrous metals
and a l l o y s
nTon-ferrous senli-n?anufactured products

T o t a l Croup k000

9 5T4
24,014
4,558
9,249
4 432
612
J

steel

3; 779
10,165

220

1 112
101
J

49 422

443

780

57,095

691.
347
1,248
105
3, 929
3,581
66,612

(contirmed)

'Table

APFZPIDIX

(con"cinue.d); Comiizodity D i s t r i b u t i o n of Imports'

11

( I n .thousands of U.S. d o l l a r s )

GROUP 5000
'IMTILE FIBXRS AND BASIC NWUFACTURES:
5100
52CC& )

5610 j

393
10,452

Raw c a t t o n
saw wool and wool tops

5400
5500

Natural fibersexceptcottonand
Artificial fibers and continuous
ments
5620
Wool yarns
Cotton yarns'
5630
f a b r i c s 5710
Cotton
Wocl f a b r i c s
5720
f a3bc,r i c s
Artificial
57
Flax, hemp a.nd j u t e f a b r i c s
5750
5760 twine Coriiage and

her

72.

PART I1

wool

T o t a l Group 5000

610m )
5509 )
66c0
6810
6900

71.~0

7220

7300
7400
7900

3,404

3,797

6,848

145

49,915

Newsprint
Paper ana pqper
board
prnducts

2,472

Total. Group 7000

386

10,017
2,874

1,617

14,582

Raw hides and skins

Leather
Other
Xubber
Xon-metallic minerals and basic prcduzts
Other raw m a t e r i a l s

5,259

4,403
561
9,879
2,318
4,964

(Excluding 6400) Timber

Tota:L Group 6000

7210

2,386

f-ila-

5,538

7,411
30,103

4,446

3,753

624

395
183

208

2,115

1,460
413

8,583

9,683

2,918
1,462
602
lo,006

(continued)

73

( I n t.housands of U.S.

dollars)

Generators,motors,electricalapparatus
Lorries
E u s s es
Passenger cars and chassis
Vehicle parts
Other r o a d t r a n s p n r t eq1:ipx"nt
Railroad. transpor ta:;ion e q u i p e g t
Ships
Sewing m c h i n e s
E1ectrj.crefrigerators
Cthcr indKst,rial a i r eu_uip-.lent
1"hotograph and mcving n z ? ; ? i n e u
OfPice machinery
Various industrid machinmy and
sy;are p a r t s
T o t a l Group 8000

Miscellaneous iron and s t e e l

manufactures
4, 398
S c i e n t i f i c a n d p r o f e s s i o n s 1 ips-ci-cuLn t s
b7 504
Wearing apparel and t e x t i l e rr,anufactz.red

,7,

(continued)

Tab le

PART 11
APPENDIX

74 -

4 (continued) .Commodity

D i s t r i b u t i o n of Imports

( In thousands of U. S. d o"- l l a r s
GESC
Code No.

>
1959

1960

1961

TGTAL PAYMENTS FOR ALL GEIGCFS

Flus : FOREIGN SUPPLIERS' CEE9IT

"
I

(Change i n ou%stand.iEg
acceptances
imports)
for
-4,500

Source:

U.S. mission

C.i.f.

tn

Greece.

values on t r a n s a c t i o n b a s i s .

7,8CO

5J 975

PART I1
APPENDIX

75 -

Table 5 . Imports from Eastern Europe ( o n a payment b a s i s )

(Calendar Year 1961 i n Cornparisan with Calendar Year 1960)
By commodity

( thousand dollar equivalent )

January

December

1961

1960
1. A-GR1CULTEU.LPRODUCTSFRIWBILY
F OR HLYAN C ONSLTMFTI ObT :

6,695
3,756
433
-7

Refined sugar
Meat (fresh, frczen and canned)
F i s h ( f r e s n , canned, e t c . )
Xheat
Cneese
Vegetables,driedfruitsandfreshfruits
Fats and oils
)
Milk ( evaporated, condensed, e-tc.

1,140

349

226

454
97

Eggs

16
34

Fulses
All o t h e r

13 1-93

Total

2. AGRICULTURALPRODUCTSPRIYARILY
ITJM.CN C O N S J I W T I ON :

NGT FOR
254

Total

3. C B M I C A L S li_hTD CHEPJiICAL FRODUCTS:

Fertilizers
Chemical s p e c i a l i t i e s a n d p h a r m a c e u t i c a l
products
Soda ash
Causticso&
A11 o t h e r

1,053

-53

Total

4. FUELS AND

PETROLEUMPRODUCTS:

5 ,001

Crude o i l
Fuel oil
Hard c o a l
Lubricants
Gas/Diesei o i l
Kerosene
Coke
Aviation gasoline
A l l other

2,465

924

3,261
2,616
2,609

7,166
6,785

1,941.
1,387

67
-133

242

Totel

53
6
17,577 17,116

(cmtinued)

174.
95
34.

- 76 -

APPL,~
iiIX

Table 5.( contf:n;zed) Imports from E a s t e r n Europe (on a payment basis)

(Calendar Year 1961 i n Comparison w i t h C a l e n w Year 1960)
By commodity

( thousand dollar equivalent )

January

1960

- December

1.961.

5. FERRCUS AND NON-FERROUS IETALS:

Ferrous metals
Non-ferrous metals
To t a l

2,056

64

2,120

6. TEXTIU FIBERS ANI1 BASICMANUFACTIJRES:

c otton fabrics
Artificial fabrics
IJool f a b r i c s
F lax, hemp and jute f a b r i c s
All o t h e r
Total

1,944
331

46
53

171

2,445

7 . TDIBER, PULP AND .PAPER:

6,195

Timber
-Pulp
Newsprint
!;-11o t h e r

549

393

654
Tot a1

8.

u r ~ W~:\J i MLTERIALS AND u s I c

PRODUCTS:

Mon-metallic minerals and basic products

All o t h e r

!Total

9. MACHINERY AND EQUIPJIENT:

Transportation eqK.ipment
E l e c t r i c a l equipment
Sewing machines
Office machinery
Ships
A l l other
To t a l

(continued)

77

PART I1
A3PENUIX

Table 5 (continued). Imports from E a s t e r n Europe ( o n a payment b a s i s )

(Calendar Year 1961 i n Comparison with Calendar Year 1960)
By commoaity

( thousand dollar equivaleilt )

January

1960

10.

- December

1961

1,G21

483
475
364
314
205

93
515

3,470

57,6721/
S o u r c e : U.S. Mission to Greecz.

60,13711

- 78

Table 6
E x p o r t s t o E a s t e r n Europe(on a payment b a s i s )
( C a l e n w Year 1961 i n Comparison with Calendar Year
1960)
By p r i n c i p a l p r o d u c t

( t h o u s a n d d o l l a r e q u i v a l e n t)
January

1960

Cecenber

1961

1. AGRICULTUUL PROCUCTS:
Tobacco a n d c i g a r e t t e s
Citrus f r u i t s , f r e s h f r u i t s
Olives
Sultanas
Currants
Sponges
Dry f i g s
Olive o i l
Sausagecasings
Aii o t h e r

and fresh grapes

Total

2. CIiEMICALS AND CHEMICAL PRODUCTS:

Colophony ( r o s i n ) and t u r p e n t i n e
Tanning e x t r a c t s
All o t h e r
Total

3.

CRSS AND METALS:

Bauxite
I r o n ore
Iron sheets
Magnesite
A
l
l other
Total

4. WXTILZ FIBERS

2-81) FASIC
MANUFACTURES:

Raw c o t t o n
Cottcin y ~ r n s
All o t h e r

To t a l

5. OThlER RAW iL4TERWL:S AND EASICPRODUCTS:

Hides and skins
Goats hair
Cement
All o t h e r
Total
(continued)

- '79 Table 6 (contirdedj. Exports to Eastern Europe (on a payment b a s i s )

(Calendar Year 1961 i n Comparison with Calendar Year '1960)
By p r i n c i p a l p r o d u c t

( thousand dollar eq1:ivalent

)
January

6. !4ISC%LLANEOUS

1960

Total

345

45,473 L/

December

1961

2,612

Source: U.S. lvlission t o Greece.

3' T o t a l e x p o r t s t o E a s t e r n
3 s follows:

Europe b y country of d e s t i n a t i o n a r e a n a l y z e d

Bulgaria
Czechoslomkia
Eastern Germany
Hungary
Folend
Rw,anie

U.S.S.R.

Total

( i n millions 02 d o l l a r s )
2.2

6.1

7.3
2.6

16.3
45.5

9.5
6.9
6.5

6.2

2.0

18.3

52.2

80-

PART I1

APPENDIX

H
H

P&YT I1
APPENDIX

r!

ld

I I

.I

. . . cn41.4 d

..

r-l

rlf 0
rN

dd d

d&dd

?I?

"a

"I"

03

"1- rl 0

II

culrl rl

ddd

I
I

x
d

r-i

(d

0
rl

r:

H
H

-82

Source:

1/
1/
4f

.-

Information supplied by the Bank of Greece.

Excluding :DL2 p a r t .

Including .Did c r e d i t s o b t a i n e d b y
Estimates lor p r o v i s i o n a l data.
Data as of July 31, 1961.
Inclujing :interest.

the Public Power Corporation.

- 83 -

Table 8

Balances on PaymentsAgreements
as o f March 31, 362

(Ir thousands of U. S. d o l l a r s )

Credit

Austria
Ee 16il
m
Denmark
Franc e
Germany
Italy
Xetherlands
Norway
Portugal

Deb it

209

75
580

Sweden

Switzerland
Turkey
Spain
Total
B.

61

1,822

B i l a t e r a l Agreement Countries
EmPt
Specialaccount
Collection account

Bulgaria
East Germany
Yugoslavia
V.S.S.R.

1,so0
2,821

Brazil

Israel
Hungary
Foland
Rumania
Czechoslovakia
Finland
Tot a1
Grand T o t a l
Source : Eank o f Greece,as

quoted in Naftemboriki,Athens,April

9, 1962.

PART I1

-84-

Table

Austria:

9.

AFFEXDC(

Trade and FayaentsAgremerts

of Greece

T r d e agreement s i g w d May 11,

renewed a n n u asl el yv etrianlL

e sa.t tersaP
tdreo t o c o l
in force signed October
10, 1959.
Settlements are effected
pulations.

195f2,subsequently

on t h e b a s i s of t h e EMA s t i -

Ac:count k e p t i n A u s t r i a n s c h i l l i n g s .
Transactions are effected
zation regulations.

on t h e b a s i s of OECD l i b e r a l i -

Lists havebeencompiledshowingimportquotas
on Greek
product,swhich are s u b j e c t t o r e s t r i c t i o n s i n A u s t r i a .
Benelux :

A new t r a d e Agreement between

Greece
and
t h ec o u n t r i e so f
BENELUX: was signed onMarch 9, 1960. This Agreement s h a l l r e main in e f f e c t f o r one year and a t the end of t h i s p e r i o d it
w i l l be considered as automatically renewed f o r another year,
and so on.

The Commercial Transaction according to the

aboveagreement a r e e f f e c t e d on t h e b a s i s of EMA s t i p u l a t i o n s . Also t h e
s e t t l e m . e n t s a r e e f f e c t e d on t h e b a s i s o f OECD l i b e r a l i z a t i o n
regulations.
Brazil:

A Trade
and
Payments
agreement
signed
on J u l y 31, 1960,
c o n t i n u e st ob ei nf o r c e .S e t t l e m e n t s
are effectedthrough
a clearingaccountkeptin
U.S. d o l l a r s .

Bulgaria:
Trade
and
payments
agreement
signed
December 5 , 11353,
extended for one-year periods. Modified by
a Protocol signed
May 12, 1956 s u c c e s s i v e l y e x t e n d e d u n t i l 1959. A new Protocol
was signed January 28, f o r 1960, s e t t i n g t h e v a l u e o f
goods
t o be exchanged a t $4 million approximately.
Clearingaccountin

U.S. d o l l a r s .

Swing limit $400,00O.

Transactions are e f f e c t e d on t h e b a s i s o f q u o t a s
commodity exchanged.

Payments a r e made i n U.S . d o l l a r s .

Commodity l i s t s withoutquotas.Nutualmost-favored
nation treatment with regard to
tariffs.

s e t per

T&le

PAQT Ii
APPEXDIX
( z o n t i m e d ) . P e d e and Pamenta A,-:reements of Greece

- 85

Czechoslovakia:
Trade
and
payment agreement signea December 6, 1958;
v a l i dt h r e ey e a r s .
Annual negotiationsforcompiling
l i s t s of
commodities t o be exchanged.
Settlements:ClearingaccomtinCzechoslovak
crowns
keptwiththe
Eank ofCzechoslovakia.
Swing margin: 10.8
m i l l i o n crowns. Transactions are e f f e c t e d on the b a s i s of
quotasforeachofthe
commodities t o beexchanged.
The
i s set for the
over-all ceiling of anticipated transactions
years 1959, 1960 and 1961 a t 78.7, 88 and 95 m i l l i o n crowns
for imports and
a t 61>71 and 78 m i l l i o n crowns f o r e x p o r t s ,
respectively.
Denmark :

Trade
and
payments
agreement
signed
February
25, 1949;
agreement i s a u t o m a t i c a l l y renewed annually: extension valid
until August 24, 1962.
Settlements are e f f e c t e d on t h e b a s i s of t h e ZMA s t i p u lations.
Transactions are e f f e c t e d on t h e b a s i s of OECD l i b e r a l i z a t i o nr e g u l a t i o n s .L e t t e r s
exchanged yearlycontair, conmo?ity l i s t s showing si=nual%uotas of certain comcodities
which are s t i l l s u b j e c t t o r e s t r i c t i o n s i n Cenmark.

Ethiopia:

Trade agreement
signed
on
June
22, 1959 automatically
are e f f e c t e da c c o r d i n gt o
extendedannually.Transactions
L i s t s have
t h e trade r e g u l a t i o ni nf o r c ei ne a c hc o u n t r y .
beencompiledwithoutquotas
of t h e goods t h a t c a n be exchanged .

Settlements are e f f e c t e d i n t r a n s f e r a b l e pounds s t e r l i n g .

Finland:

Trade agreement
signed
March 24, 1949, automatically extendedannually.
Payments agreement signedJune 9, 1960,
automatically extended annually (annual P r o t o c o l s ) ; t h e
l a t e s t e f f e c t i v e fromJune 5, 1961 t o May 31, 1962.

Settlements are effected through

a clearing account kept
with the Bank of Finland in
U.S. d o l l a r s . Swing l i m i t $1,230,00.

Is %
e?
n d:
cr'
,:each f o 7 r noslt'n p e r i o d , t h e outsta_rld.ing
bnlanze i s s e t G e d ic free forclg;nexchange.
I na d d i t i o n
any time t h a t t h e o u t s t a n d i n g b a l a n c e
of the account exceeds
t h e s w i ~ glir,it ($1,2CO,009), t h e cmouct i n excess thereof i s
s e t t l e d i n f r e e foreign excl-mge.
Transactions are e f f e c t e d on t h e basis of l i s t s without
quotas. Main Finnishexports:timber,newsprintandtheir
products. Greek e x p o r t s t: o b a c c o c, u r r a n t s f, r e s hf r u i t e, t c .
(continued)

Table
France:

(coatinued). Trade

85 -

PART I1
P*rnZPDTX
and Payments Agreements of Sreece

A new trade
agreement
signed

July- 1.8, 1961, renewed annually.

"

S e t t l e m e n t s e f f e c t e d on t h e basis of EMA s t i p u l a t i o n s .
T r a n s a c t i o n s e f f e c t e d on t h e basis of OECD l i b e r a l i z a t i o n
regulations.Forcommoditiesrestricted
i n e i t h e rc o u n t r y ,
l i s t s are compiled setting annual quotas per comnodity.
Zast Germany: Tradeandpaymentsagreementbetween
Bank ofGreeceand
Notenbank o f B e r l i ns i g n e d December 1-953. Tacitlyrenewable.
New agreement signed November 30, 1956 n o t d i f f e r i n g s u b s t a n t i a l l y from previous one.

Clearingaccountinterms
of U.S. d o l l a r s . I n
NoTJember
credit margin was r a i s e d from $25O,OOO t o $5OO,OOO, w i t h
a d d i t i m a l s e a s o n a l i n c r e a s e November-March of $200,COO.

1956

T:rade agreementsignedFebruary
12, 1951 automatically
-Federal Eiep
u
b
l
i
c
of
extended
annually.
Supplementary
agreenents 2reconcladedannually.
-GermanyThe
l a t e s t e f f e c t i v es i g n e d March 27, 1961.

"

S e t t l e n e n t s are e f f e c t e d on t h c b.%is of E M szl.plzletior:s.

C o m e r c i a l t r a n s a c t i o n s are d f e c t c c l on t h e besis of 3 X D
l i b e r n l i z a t i o n rzgxlations. Atiliiuzl lists are c o q i l c c ? zhowing
quotas i;f Grzck products whi.ch a r c s u b j e b t t o r s s t r i c t i o n s on
Germany. T o t a l s f o r t h e c w r e n t year amount t o EM 12.6 m i l l i o n .

India :

Iraq:
-

Israel:

PART IT

37 -

"
-

"
"
"

Agreement concluded March 1956, pending

the
approval
of
theParliament.
Payments e f f e c t e di n pounds s t e r l i u g . Trade
I D 2e0,OOO each way provided.
agreementonly.Deliveriesof
Greece would exportminerals,chemicals,pharmaceuticals,and
o l i v e o i l . , and import barley and corn.
Payments
agreement
and t h e Bank ofGreece

dated
June

, valid until

24, 1951 between Bank Leumi

June 30, 1956.

By a new agreementof June 10 - J u l y 2 , 1.956 betweenthe

Bank ofGreeceandthe
Bank 01 Israel the previous agreement
was worded i n a s o l e t e x t i n c o r p o r a t i n g a l l amendments e f f e c t e d
i n t h e meantime. I t s v a l i d i t y was e x t e n d e du n t i l June 30, 1962.
The account i s maintained by the
d o l l a r s . Swing l i m i t : $l5O,OOO.

Bank o f Greece i n U.S.

P r i v a t e barter t r a n s a c t i o n s c a n a l s o
tion to those through clearing.
I Laly:

be e f f e c t e d i n a d d i -

Trade
agreement
signed
November 10, 1954 and a d d i t i o n a l
Protocol Decernber 22, 1955, automatically extended annually.
Settlements are effected
Transactions are effected
zation measures.

on t h e basis of -3U.A-

stipulations.

on t h e basis o f OECD l i b e r a l i -

Commodity l i s t s are compiled showing c e r t a i n Greek products whose i m p o r t i n t o I t a l y

i s subject t o quantitative
restrictions.

Japan:

Trade
and
payment t r a n s a c t i o n s are e f f e c t e d on t hbe a s i s
of t h e exchangeof l e t t e r s s t i p u l a t i o n s o f February 6, 1961
andOctober 7, 1961 and i n conformity with the trade and payi n eachcountry.
ment r e g u l a t i o n s i n f o r c e
Payments a r e made i nc o n v e r t i b l ec u r r e n c i e s .
Rough l i s t s
without quotas have been ccmpiled concerning
Greek products t o
beexported t o Japan.

Lebanon:

Wade agreement
signed
on J u l y 3, 1958, e n t e r e idn t foo r c e
following i t s r a t i f i c a t i o n on April 17, 1961. The most favored
nation clause i s granted reciprocally with respect to customs
d u t i e s . Payments will b ee f f e c t e di ns t e r l i n g .

(continued)

"

Libya :

wewed
The tradeagreementof
March 1-6,
1957 i s t a c i t l y r-f o ry e a r l yp e r i o d s .
Lists of exchangeablecommoditiesare
attach.ed. It providesfor a mutualgrantingofthe
mostf a v o r e d - n a t i o n c l a u s e f o r customs d u t i e s and navigation.
Payments i n pounds s t e r l i n g .

Mexico :

For t h e f i r s t time a tradeagreementbetweenGreeceand

t h e U n i t e d S t a t e s of Mexico was concluded on A p i l 12, 1960.
The two c o u n t r i e s a g r e e t o a c c o r d e a c h o t h e r r e c i p r o c a l l y
the most-favored-nation treatment, with respect to customs
d u t i e s andchargesof
any k i n di nc o n n e c t i o nt h e r e t o .
Commercial transactions are carried out
on t h e basis o f f o r e i g n t r a d e
r e g u l a t i o n si ne f f e c ti ne a c hc o u n t r y .
The payments of t h e
above t r a n s a c t i o n s w i l l be e f f e c t e d i n d o l l a r s .

Morocco:

Norway:

T:rade agreementsigned on November 1, 1961. Tradetransaction,sareeffectedaccordingtothetraderegulationsin

forceineachcountry.Greeceextendsto
Morocco t h e l i b e r a l i zationmeasuresappliedto
OECD c o u n t r i e s . Commodity l i s t s
are compiled showing: annual quotas of t h e goods s u b j e c t t o
q u a n t i t a t i v er e s t r i c t i o n s .S e t t l e m e n t sa r e
made i nc o n v e r t i b l e
currencies.
Tradeagreementsigned
on March 12, 1949 andpayments
agreementsigned on March 14, 1950,automaticallyextended
annually.
T r a n s a c t i o n s a r e e f f e c t e d on t h e basis of t h e CBCD
l i b e r a l - i z a t i o n r e g u l a t i o n s , i n combination t o t h e l i s t o f
Greek products ( s u b j e c t t o q u a n t i t a t i v e r e s t r i c t i o n s i n
Worway) mentioned i n t h e P r o t o c o l o f May 1 2 , 1355, extended
annua1l.y.
Settlements are e f f e c t e d on t h e basis of t h e E Y i s t i p u lations, in combination to the above-mentioned
paymentsagreenent .

Poland :

Original trade

and paymentsagreementsignedJanuary

1954, between the Bsnk of Greeceand the National Bank of

Poland. On July 3, 1956 new agreementsweresignedbetween

11,

t h e two c o u n t r i e s . Commercial t r a n s a c t i o n sa r e now regcllated

by the trade and
paymentsagreementof
November 8 , lg6O, which
w i l l be i n e f f e c t f o r t h r e e y e a r s .
The o v e r - a l l c e i l i n g of
anticip,s-ked transactions for the three-year period
1960/61,
1961/62 and 1962/63 i s s e t a t $11.5 m i l l i o n , $12.5 m i l l i o n ,
a clearing
and $14 million,respectively.Settlementsthrough
accountkeptin
U.S. d o l l a r s . Swing c r e d i t : $1,500,000.

.
-.
Portugal:
Trade agreement signed on December 31, 1949 and Protocol
of May 24, 1955 annually extended. Settlements are effected
on the basis EK.4
of stipulations.

Corrmercial transactions are effected on the basis

of OECD
liberalization regulations, in combination to the abovementioned texts.
h a a n ia:

Trade and payments agreement signedMay 19, 1954 and

Protocol on November
9, 1356 and July 8, 1959.
Settlements are effected thi-ough
a clearing account.
$750,000.

Swing credit:

Commercial transactions are carried out on the of

basis
lists includingamual quotas ofcomodities to be exchanged.
Anticipated ceilingfor the current year has been $6.5
set at
million for exports and
$7.5 million for imports from
Rumania.

15, 1954 auto-.Spain:TradeandpaymentsagreementsignedMay

matically reneve!: annually. The Frotocol ofMay 15, 1955 is
aleo valid, extended yearly. Settlements are effected on the
basis of the payments agreement provisions in co&ination
to
EMA stipulations.
Commercial transactions are carried out
on the basisof
annual quotas
of commodities to be exchanged in
OECD liberalization regulations.
combination to the

l i s t s showing

Sweden:

TradeagreementsignedonJxne
extended annually.

25,

1948 autonatically

Trade transactions are effected according

to liberalization measures in the frame of the OSCD.
Settlmmts arc made accordingto the EMA stipulations.
Switzerland: Trade agreement signed April 4, 1952, autcratically renewed annually. Settlements are effectedon the basis ofs
!@.
stipulations.
Comcrcisl transactions are carried out
on the basisof
OECD liberalization regulations.
Greek exports comprising only wine and carpets, which are
subject to quantitative restrictions in Switzerland, are included in a commodity list.
(continued)

- 90 -

Table(continued).

PART I1
APPENDIX
P a & mAd
Payments
Agreements
of Greece

Syria:

The trade agreement ofJune 2, 1952 i s t a c i t l y renewed f o r

annualperiods.
It i s not accompaniedby l i s t s . It provides
for the mutual granting of the most-favored-nation clause
for
customs d u t i e s . Payments are made i n pounds s t e r l i n g .

Tunisia:

Tradeagreementsigned
newed annually.

onMarch

2, 1960 automztically re-

S e t t l e m e n t s a r e e f f e c t e d i n t h e same way as those between

Greeceand the French franc
area.
Transactions are c a r r i e d out on t h e basis of l i s t s showing
annual. quotasofcommodities
i n combination t o l i b e r a l i z a t i o n
regulations in force in either country.
Turkey:

Tradeandpaymentsagreementsigned
renewed annually.

November 7, 1353

Settlements on t h e b a s i s of t h e payments agreement provisions,, in connection with EMA s t i p u l a t i o n s .

Commercial t r a n s a c t i o n s a r e c a r r i e d

out on t h e basis o f

OECD l i b e r a l i z a t i o n r e g u l a t i o n s as regards imports

o f lkrkish

products into Greece; imports

of Greek p r o d u c t s i n t o Turkey on
t h e basis of import programs prepared
by t h a t c o u n t r y from
time to time as Turkeyhassuspended
the application of the
OECD l i b e r a l i z a t i o n r e g u l a t i o n s .
Agreement signed May 26, 1953; t a c i t l y renewed annually.
United
Arab
Terminable with three months notice.
Republic :
Clearing account (Collector Account) in Egyptian
pounds
with14ational Bank of Egypt. M a x i m u m debit balance L.3 1,000,000.
F i n a l s e t t l e m e n t i n goods o r i n c u r r e n c i e s a g r e e d t o by both
parties.

Subsequent protocols concluded

on September 1, 1954,
August 15, 1957, April 19, 1960, andAugust 3, 1961, brought
about some modifications t o the aforementioned basic agreement.
U.S.S.R.:

TradeandpaymentsagreementsignedJuly
28, 1953 supplemented by the 8.greement of J u l y 21, 1958, e f f e c t i v e f o r t h r e e
years, i.e., t o Eecember 31, 1960.
Settlements through a c l e a r i n g a c c o u n t i n
Swing l i m i t : $4 m i l l i o n .

U.S. d o l l a r s .

Commercial t r a n s a c t i o n s are carried o u t on t h e b a s i s of

l i s t s showingcommodities t o be exchanged with quotas,
renewed
for each year.
(continued)

Viet -Ram:

According t ot h el e t t e r s
the most-favqred-nation clause
customs d u t i e s .

exchanged
on
December 6 ,
has been mutually granted

1957,
for

Yugoslavia:
Commercial transactionsaregovernedbytheagreement
on
economic cooperation and commercial t r a n s a c t i o n s o f October 1,
1960, t h e v a l i d i t y of which covers the five-year period
January 1, 1960 t o September 30, 1965. With r e s p e c t t o payments, the p a p e n t s agreement of February 28, 1953 i s s t i l l
in effect.
Settlementsareeffectedthrough
a c l e a r i n ga c c o u n t .I n
Yugoslav
A.pril 1957 it was s t i p u l a t e d t h a t 10 per cent of the
receipts can be converted into currencies
o f t h e EMA c o u n t r i e s .
This percentage has been increased by a f u r t h e r 10 p e r c e n t
s i n c e A p r i l 10, 1958.

92

Table 10.
..

T o w i s tA r r i v a l s

A.

Tourism

and Expenditures

3"

AverageExpendit
per Towist
( I n U. S. dollars )

Foreign ExchangeRec e i p t s from Tourism

( In thousand U S $ )

Number of
Arrivals

..

The average stay of f o r e i g n t o u r i s t s i n Greece i s e s t i m a t e d a t

about 10 days.
f
2 Estimates.

Available "
Acccmmodations
i n Greece,August
-

B.

Type of AccomBuildings
rnodation
Luxury hotels
1st c l a s s h o t e l s
I1
2nd I'

3rd.

4th

"

II

11

I'

I1
5th
Hostels
Boarding
houses
Furnished
apartments

Total

Rooms

1961

Beds

Baths or
Showers

13
93

152

315
366

10,270

654

12,4@3

260
26

1,882

Source:Informationsuppliedby

30,831.

56,979

t h e Greek a u t h o r i t i e s .

10,790