WASHINGTON (MNI) – Below is the second and final section of the
text of the speech delivered Sunday by Deputy Prime Minister and Finance
Minister of Greece Evangelos Venizelos at the closing lunch of the
Annual Membership Meeting of the International Institute of Finance:

I do not think you can find many examples at the international
level of such a huge and rapid fiscal adjustment effort. But you have to
know this comes with a political and social price.

What is important for us is to bring the vicious circle we are
trapped in to an end. The harsh fiscal adjustment measures reduce the
available income and demand. Rumors and the international mood are fed
by internal insecurity and vice versa. All these make recession deeper
and liquidity tighter. We try to meet the fiscal targets while recession
keeps pushing them away. We respond by introducing additional measures.
The political and social cost of the programme rises.

Greece feels the international uncertainty and knows that our
partners must answer to their respective parliaments and societies, as
far as the course and the outcome of the support mechanisms are
concerned.

But Greece is not the scapegoat of the Euro Area or the
international economy. Greece is a historical and proud country, with
citizens who are doing many sacrifices to save it and see it recover.

It is Greece’s final and irrevocable decision to do whatever it
takes to fulfill its obligations towards its partners, towards the Euro
Area, towards the IMF.

There is so much that has transpired over the past 15 months. It’s
not everything, but it is a lot. But light always falls on the delays
and the deviations and not on the large picture of accomplishments.

Over the past few days we had to make some very difficult and tough
decisions and we did so without calculating political costs, despite the
need for a solid national front and a single-voiced support of those
decisions.

During the last two weeks, a number of actions have been taken to
meet the 2011 and 2012 fiscal targets against a background of deep
recession, poor liquidity conditions, uncertainty and anxiety.

Three months after taking the additional measures in June 2011,
further additional measures of another 3 percent of GDP were adopted by
the Council of Ministers this week.

The new measures include:

–A further reduction by 20% in the public sector salaries
(additional to the 15% already implemented for the civil service and the
25% cuts in the public enterprises). These wage cuts are combined with a
structural change in the public sector wage grid that ensures long term
savings and public sector productivity improvements.

–A further 4%, on average, cut in pensions (additional to the 10%
already implemented). These cuts are complemented by a completion of the
pension reform (via reforming also the supplementary pension funds) that
ensures long term viability of the Greek pension system.

–The creation of a labour reserve to which 30 thousand public
sector employees will move by the end of 2011.

–The application of the rule of one recruitment for every ten
retirements for the duration of the Medium Term Fiscal Strategy.

–Significant tax expenditure cuts of 0.6 percent of GDP
implemented retroactively from January 2011.

–The introduction of a property tax to be collected via the
electricity bills mechanism with an annual yield of 1.1 percent of GDP
for the duration of the Medium Term Fiscal Strategy.

On the privatizations front, the September 2011 target is 1.7
billion euro. This target will be reached within October with the 1.4
billion to be reached within September. By the end of 2011 we expect to
have collected from privatisations 4 billion euro. All privatization
programmes for the period up to 2014 mature in order to move more
swiftly, now that the Privatizations Fund is up and running within a
framework of total transparency and consensus.

Two weeks ago, a special Council of Ministers meeting was devoted
to the acceleration of the structural reforms. We took once more
difficult political decisions because it is our wish and our
determination to fully implement the Medium-Term Fiscal Strategy and
meet its targets.

The Greek banks take part in the PSI in full acceptance of the
relevant losses. The same is true for the participation of Greek social
security funds. Greek institutions are a very important part of the
entire effort.

The replies to the LOI are very encouraging. The targets can be
met, provided that it is understood that there is a mutually beneficial
situation under way between Greece, its institutional partners and the
private sector.

Greece wants to make it and will make it. The July 21 decisions
provide a clear and secure institutional framework. They are a meeting
point of a creative balance between the official and the private
sectors.

Greece is and will always be an EU and a Euro Area member-state.
Greece always respects and implements the decisions of the European
Council and the Eurogroup in matters of high importance not only for
itself but also for the Euro Area protection mechanisms.

Thus, I repeat that we must break the vicious circle, we must get
rid of the uncertainty and ambiguity, we must give answers to
profiteering aspirations and verify the wish and capacity of the Euro
Area to secure the euro.

The implementation of Greece’s new program is an important step
that will remove uncertainties, increase liquidity and convince the
markets that the Euro Area can indeed protect itself and its member
states. Combined with our own persistence towards our goals, this can
change the mood.

Greece is asked to prove its willingness and commitment. We do it
without hesitating to take the necessary measures whenever it is
required. Disregarding for the political cost.

But it is only logical and fair that we receive an institutional
and political shield in return, not just for Greece but for the Euro
Area as a whole and in the end for the international economy itself. It
is also important for the Greek people, who are suffering in this
difficult adjustment process.

(2 of 2)

** Market News International Washington Bureau: 202-371-2121 **

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