DOCUMENT

OF
INTERNATIONAL
MONETARY
FUND

AND NOT FOR PUBLIC USE

To:

FOR
I AGENDA

Kembers of the Executive Board

From:
The
Secretary
Subject: 1957 Consultations

Greece

Attached for consideration by the Executive Board is the

staff report on the
1957 consultztions with Greece. The recomendations of the staff appear
on pages 19 and 20 of PartI. Background
of Greece is coninformation on the economy and restrictive system
tained in Part
I1 of the memorandum.
the

This subject has been placed on theof agenda

a meeting of
Executive Board tentatively scheduled
f o r June 25, 1958.

Att: (1)
Other Distribution:
Department Heads
Division Chiefs

IXi'EXDT ION[:I, XCmT.mY FUID

GEECE
P.&T I
. " " " . - " "Staff Heaort end RecommendatTons
Prepared by

1957 Consulfations

Staff R e p r e s e n t a t t v e s f o r 1957 Consultations wi.thGreece

(%viewed by t h e Committee on .Article

Approvedby

X N Ccnsuitations)

G. F e r r a s and I.S. Friedman

June 12, 1958

I.

Introduction

In rccordance with the procedure adopted

f o r t h e Article X I V Consultst l o n s , a staff m i s s i o nc o n s i s t i n g o f Yr. E r n e s tS t u r c , Yr. F.A.G. Keesing,
and Bks. H. T h o q s o n h e i d d i s c u s s i o n s w i t h
Greek a u t h o r i t i e s i n Athensfrom
February 25 t o March 4 , 1958. The Greek r e p r e s e n t a t i v e s w i t h whom d i s c u s s i o n s
X. Zolotas,Governor of t h e Bank of Greece,
were heldinciu.ded:Frofessor
Pesmrzoglou,EconomicCounsellor
o f t h e Sank of Greece, Mr. .A.
K y r i t i l i t s i s , D i r e c t o r of the Reseerch Department o f t h e Bank ofGreece,
lk0C. C-oustis,?Iinistry of Coordinatioc,
Trachas,Director,Ministry
of Finance, and
J. Coxitsas,Eirector,PiinistryofComerce.Other
stzffr' menbers of t h e Earl< of Greeceand t h e X i n i s t r y o f Comerce also took
p a r t in the discussions.

Xr. J.

Nr.

!+ro

11.

Fund ZelationswithGreece

The Greekquota i n t h e Fcnd i s $40 million. The q u o t as u 5 s c r i p t i o n

hasnotbeennaid,
and no parvaluehasbeenestablished.
The o f f i c i a l
exchcnge r a t e i s 30 drachroas per U.S. d o l l a r .
The d i s c u s s i o n s f o r .the 1956 Consultations with Greece were held
in
Pithens i n Mzy 1956, and c o n p l e t e d i n GJashington i n September a t t h e time.
of the .4r,nuel Pieeting. The s t a f f r e p o r t (SN/56//S2) was considered by t h e
1956. A t t h a t time t h e
ExecutiveBoard
a tK e e t i n g 56/61 onDecenber21,
Executive Board took the following decisioc:

"1. The Goverment of Greecehasconsultedthe

Fund under
A r t i c l e X I V , S e c t i o n 4 , of t h e FundAgreement concerning the
f u r t h e r r e t e n t i o n of i t s t r a n s i t i o n a l arrangements.
"2. During 71954 and 1955 production and t h en a t i o n a li n c o n e
c o n t i n u e d t o r i s e and, d e s a i t e f u r t h e r ? r i c e
and wage i n c r e a s e s ,
confidence i n t h e c u r r e n c y improved w i t h f a v o r a b l e e f f e c t s on
savings and t h eb a l a n c e of paiyments.However,
b u d g e t a r yd e f i c i t s

- 2 -

PLT I

financed by t h e c e : l t r s l b a n k l e d t o r e l a t i v e l y s t r o n g i n f l a t i o n a r y
p r e s s u r e s l a t e i n 1955. The Government h a st a k e nc r e d i t
and f i s c a l
measures t oc o u n t e r a c tt h e s ep r e s s u r e s .
The Fund c o n s i d e r s t h a t i n
order to stFengthen the consolization achieved during the past
few
y e a r s and t o eacouraga the formation of savings necessary
f o r the
f u r t h e r developmen',of
t h e economy, it i s e s s e n t i a l t h a t t h e r e c e n t l y
edopted f i s c a l and c r e d i t p o l i c i e s s h o u l d be c o n s i s t e n t l y and
vigorously applied.

" 3 . Despite a s u b s t a n t i a li n c r e a s ei ni m p o r t s ,t h ed e f i c i t
on
goods an5 s e r v i c e sh a ss l i g h t l yd e c r e a s e d .
E x p o r t s and i n v i s i b l e
U.S.
e a r c i n g s havecontinued
t o rise. T o t a lr e c e i p t s ,i n c l u d i n g
s i d and n e t p r i v a t e c a p i t a l r e c e i p t s have s u b s t a n t i a l l y e x c e e d e d
The gold and
n e te x p e n e i t u r e s on goods and servicesaccount.
f o r e i g n exchangereservessiccetheend
of 1954 have somewinat
improved.

"4.

The Fundwelcomes t h e p r o g r e s s made byGreece i n r e d u c i n g

r e s t r i c t i o n s and i n e l h i n a t i n gd i s c r i m i n a t i o n .G r e e c e
no l o n g e r
makes importantuse of r e s t r i c t i o n s on i x p o r t s . However, the Fund
urges Greece t o re-examine t h e nee2 f o r i t s p r e s e n t b i l a t e r a l t r a d e
and paymentsagreements,whichhave
somewhat i n c r e a s e d i n s c o p e .

"5. I nc o n c l u d i n gt h e
1956 c o n s u l t a t i o n s ,t h e Fund has no
o t h e r cow,lents t o rn&e on t h e t r a n s i t i o n a l a r r a n g e m e n t s m a i n t a i n e d
by Greece. It

111. S u m a r y o c D i s c u s s i o n s

1.

Introductory remayks

The prlmary objective or" theGovernment'seconomicpolicy

is t o r a i s e
t h e s t a n d a r d of l i v i n g of t h e Greekpeoplethrough
a s o l u t i o n of t h e unenployrrent an2 undeL"ernp1oyment problemwhich i n r e c e n t y e a r s h s s b e e n f u r t h e r
accentuated by therapidgrowth
of thepopulation.Considerablepostvar
e z i g r a t i o n was only a p a r t i e l a l l e v i a t i o n of t h e problem. I n t h e Governnent's view the solution to this
prObk?m l i e s i n t h e e x p a n s i o n of t h e prod u c t i v e f a c i l i t i e s of the nation through vigorous economic developKent
I n t h ee a r l yp o s t w a ry e a r st h ee x e c a t i o n
of t h i s p o l i c y WBS handipolicy.
capped by l a c k of confidence of the public in the national currency, which
inducedhoardingofgold
and " r e a l a s s e t s t 1 , and c a p i t a l f l i g h t , a t t h e
It was, t h e r e f o r e , f e l t t h a t t o
make
expense of productiveinvestment.
s u b s t a n t i a l progress i n t h i s r e g a r d it was e s s e n t i a l f i r s t t o r e - e s t a b l i s h
confi2ence by b r i n g i n g t o an end the inflation which had Fersisted in Greece
f o r v a r i o u sr e a s o n su n t i lt h eb e g i n n i n g
o f 1952. The p o l i c y of s t a b i l i x a t i o r , was i n i t i a t e d i n t h e c o u r s e o f 1952/53 when t h e p o s t w a r i n f l a t i o n a r y
p r e s s u r e s were a r r e s t e d by d r a s t i c f i s c a l 2nd c r e d i t measures,theexchange
r a t e of the drachma s u 3 s t a n t i a l l yd e v a l u e d , and t r a d e and payments r e s t r i c t i o n s an6 d i s c r i m i n a t i o ns u b s t a n t i a l l yr e d u c e d .
The r e s u l t sa c h i e v e d i n
t h e f i v e y e a r ss i n c et h ed e v a l u a t i o no ft h e
drachma a r e g r a t i f y i n g .
The
109 i n 1952 t o 171 i n 1957
index of agricultural production increased from

- 3 -

PkRT I

(198 = 1CO).
I n t h e scme pezloci tile intiex of i n d u s t r i d production(including e l e c t r i c i t y ) r m e iroin 124 t o 29.4 (173 = 100). The g r o s s n a t i o n a l
product i n r e a l terns i n c r e a s e 6 i n 1952-57 from 42 b i l l i o n drachmas t o 59
b i l l i o n arachinas. kt the sane tirre t h eb a l a n c e of pa:ments on goods snd
s e r v i c e sa c c o u n ti q r o v e ds i g n i f i c a n t l y .
The. d e f i c i t wes reducedfrom
$320 n i l l i o r , i n 1$5l t o $90 m i l l i o n i n 1957. h p o r t s (f. 0.b. rosefrom
$375 rK!!lion i n 1951 t o , $ 5 2 1 m i l i i o n i n 1957, and e x p o r t s f r o m $103 n i l l i o n
t o $223 mi!,lion.
I n v i s i b l er e c e i p t s ,e s p e c i a l l ym i g r a n t s
and s e m e n s
by $178 n i l l i o l l d u r i n g t h e
remittances and r e c e i p . t s f r o n t o u r i s m , i n c r e e s e d
same pericd. As t h e r e was a considera5lecapitalinflow,mainly
of shortterm and n e d i m - t e r m s u p ? l i e r s * c r e z i t , and a s f o r e i g n e s s i s t e n c e wes
s i g n i f i c z n t , g o l d and f o r e i g n exchangekoidings of t h e BarkofGreecerose
from $80 n i l l i o r ? a t t h e end of 1951 t o about $200 m i l l i o n a t t h e end of
13%. Eowarer, i n 1957 the)- f e l l ! by $21 m i l l i o n .
Eespitetheseresultsthereduction
o f under-employment remains a
d i f f i c u l t problem f o r economic?olicy.Investments
i n i n d u s t r y and agric u l t u r es u f f i c i e n - bt oa c c o m p l i s ht h i st e s kc o v l d
not,be undertakenas
s a v i a g s and f o r e i g n c q i t a l i-rcflow were not exough t o f i n a n c e them. Xoreo-yer,a
lal-ge p a r t of s a v i n g s , a t l e a s $ i n t h e y e a r s 195356 , was i n such
2 forn t h a t it could not be easily nobilized fo=. finencing nroductive
investner,t.Inaddition,
the;-e W B S incessslnt demand f o r an i n c r e a s ei n
corAsurhptionby l a b o r and. f a r m e r s . Inresponse t o t h e above p r e s s u r e s ,
wageswere i n c r e a s e d a x i r e s x l t e d i n a s i g n i f i c a n t r i s e i n t h e r e a l
iacorne of t h e wo:kers
and sslariec! people in t h e y e a r s b e t w e e n 1953 and
1957. Farm p r o d u c t p r i c e s were a l s o r a i s e d 3y G o v e r n n e n t i n t e r v e n t i o n t o
such ~n extenl;as t o a c c o r d a s u ? x t a n t i a l ~ y l a r g e r i n c r e e s e i n t h e
incomes
of f a r n e r st h a nt h ei n c r e a s ei np r o d u c t i o n
wouldhave j u s t i f i e d , I n c r e a s e d
corxumption i s r e f l e c t e d a l s o bythe rise i n t h e volume of h p o r t s of
consurr.eT goods.
Investment w8s alsohzndicapped by t h e l a c k of i n s t i t u t i o n a l a r r a n g e mer,ts whichwosld a l l o v t h e c h a n n e l i n g
of savingsthroughthebanking
and
s y s t e n o r c q i t z l market t o t h ea p p r o p r i a t ep r o j e c t s .E v a s i o n
i n e f f i c i e n t c o l l 5 c t i o n o f taxes necessitated the maintename of heavy
t e xr a t e s ,w i t h o u ta c c o r d i n gt h e
Government s u f f i c i e n t s u r p l u s o f c u r r e n t
rev5nue overcurrentexpendituretoundertaketheexecution
of investment
projectsconnectedwith
power, c o m u n i c a t i o n f a c i l i t i e s , and l a r g e - s c a l e
i r r i g E t i o n which would have stimulated and f a c i l i t a t e d p r i v a t e i n v e s t x e n t .
I n the l i g h t of t h e s e d e v e l o p e n t s and p o l i c y o b j e c t i v e s t h e d i s zassions w i t h t h e Greek r e p r e s e n t a t i v e s , i n a d d l t i o n t o a review of
currentdsvelopments,centere6
on ( e ) c r e d i t and f l s c a l measuresdesigned
( b ) balance
t os t i m u l a t ei n v e s t r e n ti nc o n d i t i o n so fi n t e r n a ls t a b i l i t y ;
of paymentsdevel-opments
i n 1957 and nrospects f o r 1958; and ( c ) r e c e n t
developments Ln t h e r e s t r i c t f v e s y s t e n
sad t h e p r o s p e c t s f o r a f u r t h e r
r e d u = t i o n i n r e s t r i c t i o n s and d i s c r i r ; l i n e t i o n , e s p e c i a l l y t h o s e a r i s i n g
from bi1aterali.m.

-4.-

2.

PhlT I

I n t e r ndael v e l o a e n t s

In L957 t h e g r o s s n a t i o n a l p c 3 . u c t i n c r e a s e d i n r e a l t e r n s
by aboat
compared t o some 5 ?er cent I'.n 1956. The mainreason' f o r
t h i s s u b s t a n t i a l . i n c r e a s e wasa
r e c o r db a n e s ti nc e r e a l s ,v e g e 3 a 3 l e s
and
f r u i t s . The r e s u l t i n g i n c r e a s e i n p?urchasingporJerof
t h er u r a lp o p u l a t i o n ,
which was strengthened by t h e i n c r e a s e d s u p p o r t p r i c e s f o r
many products,
es?ecisl?-yvheat,broughtaboutalso
a revivalinindustrialproduction,
p r i m a 5 l ; -t e x t i l e s zna o t h e r consumergocds.
On L l eo t h e r hand,production
of b u i l d i n g m a t e r i a l s slowed down. . A g r i c u l t u r a lp r o d u c t i o ni n
1957 increased by i6 P e r c e n t w h i l e i n d u s t r i a l p r o b u c t i o n i n c r e a s e d
by 8 p e r c e n t ,
c3mpared u i t b 1%.
The i n c r e a s ei ni n d u s t r i a lp r o d u c t i o nv a sa c h i e v e d
p r i m a r i l yt h r o u g ha ni n c r e a s ei np r o d u c t i v i t y ;i na g r i c u l t u r e ,
however, t h e
im>ressive rise was p a r t l y due t o investment i n p r e v i o u s y e a r s m d b e t t e r
mzrketfng,butprimarily
due t o very favorableweatherconditions.
To
i n c r e a s e employy-eat o F p o r t u n i t i e s f o r a r a y i d l y growingpopulation,the
I n explainingtheneasureswhich
Govermmlthad t o r e l y oninvestment.
theauthoritiestook
t o i n c r e a s e t h e v o l m e and t o d i r e c t t h e f l o w of
i n v e s t m e n t s i n t o t h e rnost d e s i r a b l e d i r e c t i o n , t h e
Greek r e p r e s e n t a t i v e s
stated that these efforts
:.Jel-e r e s t r a i n e d by theoverridingobjecti-;eof
t h e Government of m a i r k e i n i n gi n t e r n a ls t a b i l i t y .I n v e s t m e n ti n c r e a s e d
onlybythe
same percentageasthegrossnationalproduct,while
some 4.0
p e r c e c t of fixed investmentcontinued t o bespeat on r e s i d e n t i e l c o n s t r u c t i o n . The Greek r e p r e s e a t a t i v e se x p r e s s e dt h e
hope t h a tw i t hi n c r e a s e d
confidence i n t h e n a t i o n a l c u r r e n c y
i n t h e coming y e a r s i t w i l l be p o s s i b l e
todirectsavingsintoproductiveinvestment
on a l a r g e r s c a l e t h a n h i t h e r t o .
They a l s o p o i n t e d o u t t h e c o n s i d e r a b l e p r o g r e s s v h i c h h a s a l r e a d y b e e n
echieved. The p a r t i c l ? a t i o n of farmers i n t h e f i n a n c i n g of smeller irrig a t i o n and r e c l a m t i o n P z o j e c t s , and t h e i r f u l l a p p r e c i a t i o n of improved
seeds and breedingtechniquesareencouregingsigns
of progress. The
farmers'cooperativeefforttoachieveundertheguidance
of t h e F i n i s t r y
of . k g r i c u l t u r e t h e s t a n d a r d i z a t i o n of t h e i r p r o d u c t s , e s p e c i a l l y i n f r u i t
i s beginning
and vegetableproduction,
and t o o r g a n i z e e f f i c i e n t m a r k e t i n g
t o b e a r f r u i t i n r e l a t i o n t o p r o d u c t i o n a s well as export.

9.5 Fercent,as

.cis f a r 8s Government i n v e s t m e n t p r o j e c t s me concerned,theGreek

r e p r e s e n t a k i v e s e x p l a i n e d t h a t t'nese c o n t i n u e t o c e n t e r
onpower,conmmic a t i o n s andsome
rnejor p r o j e c t s i n a g r i c u l t u r e
and i n d u s t r y .I na d d i t i o n ,
the Goverment has snonsored certain investments
i n o r d e r t o a c h i e v e imrr,ed i a t es t r e n g t h e n i n go ft h eb a l a n c e
of paynects and t o s t i m u l a t e s t i l l
f u r t h e rl a b o r - i n t e n s i v ea g i - i c u l t u r a lp r o d u c t i o n ,e . g . ,f e r t i l i z e rp l a n t s
and a s u g a rb e e tf a c t o r y .
Frivste i n d u s t r i a li n v e s t m e n t ,a sr e f l e c t e db y
t h e m o u n t t h s t was spent on housing construction, leaves
much t o be
d e s i r e d .E h c e p tf o r
a l a r g e r t r a n s f e r of s h i p s m d e r t h e Greek f l a g , t h e
B nodern shipyard i n t h e
most important project wss the comFletion of
Piraeusregion.
Nuch importance i s b e i n ga t t a c h e dt ot h ed e v e l o p e n to f
a s h i p p i n gi n d u s t r y i n Greece. The Governnent'believesthztGreececould
becomea
competitiveproducer.
.4n expansion o f s h i p b u i l d i n gh a st h e
a t t r a c t i o n t h a t i t i s a r e l z t i v e l g l a b o r - i n t e n s i v e indust,-y and hencecould
makea
n a j o rc o n t r i 3 u t i o nt ot h es o l u t i o n
of t h e unemploymentpro5lern.
The
an i n c r e a s e d r a t e of
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 n o r d e r t o a c h i e v e
it woul?. be e s s e v t i a l t o p o c e e d a t a more
privateindustrialinvestment,

- 5 -

PART I

rzFidrateinEoverlLrient-s?onsor~~snfrastructurerinvestxents
an& moreover, t o inGuce t t e benking s;-stem t o s h o ; ~g r e a t e r i n t e r z s t i n proxoting
i n d u s t r i a l ven-Lures. The Greek r e p e s e n t a t i v e s a g r e e d t h a t ? n o r d e r t o
a c h i e v et h e s eo b j e c t i v e si nc o r , d i t i o n s
of i n t e r n e 1 s t a b i l i t y , c o n s l d e r a b l e
s h i f t i l l e q h a s i s i n f i s c s l and c r a d i t p o l i c y would 3 e r e q u i x d , p r i m a r i l y
asregardsthoseneasureswhich
a tp r e s s n te n c o u r a g e
consumption. In 1957
p r i c e s renained stable only because
i t was p o s s i b l e t o s a t i s m t h e
demand
created by increased farm
ir?comes with stepped-up imports of
raw m a t e r i a l s
end consumer goocb, with a c o n s e q u e n t d e t e r i o r a t i o n of t h e b a l a n c e of payments.

I n th? course of 1956, whena s v . b s t a n t i a l b u d g e t d e f i c i t t h r e a t e n e d t o

exerge,the Governmnnt t o o k s e v e r s 1 n e a s u r e s t o i n c r e a s e r e v e n u e
and t o
reduceexpenditures.
The revenueraisingmeasuresinvolved
some upward
of t i g h t e n i n g the essesszdjustment i n tax r a t e s , b u t c o n s i s t e d p r i m a r i l y
ment procedure a
d!stre:Igt!;ening of measuresagainsttaxevasion.
Cs a
r e s u l tt h et h r e a t e n e db u d g e t a r yd e f i c i t
was Lnzteriallyreduced.These
meas!rres and t h e i n c r e a s e d economic e c t i v i t y and h i g h e r i n p o r t s a f f e c t e d
govermcntrevenuefavorably
i n 1957. The p r e l i m i n a r yb u d g e t e r yr e s u l t s
i n 2 i c c t e t h a t a s u r p l u s of aSout 175 m i l l i o n d r a c h n a s IJZS achisvedwhich
vasused t o h e l p t o finzlncetheinvestmentbudget.
The s u r p l u s was
achieveddespitethefactthatcertainsubsidyoperations
which were
formerly covered by t h e c s n t r a l b a n k , e . g . ,
Government s u b s i d i e s f o r
Tertilizersalestothefarmrs,netlossesfromtheintervention
i n the
mzrket :or e g r i c u l t u r s l p r o d u c t s , wereincluded i n t h e b u d g e t i n the amount
oi about 200 xniliiondrachmas.Governnentinvestnentexpeniitures,vhile
s o r e 20 p e r c e n t l e r g e r t h a n i n p r e v i o u s ye-am,. (when a comparableperiod
i s considered),werefinancedfromnor+irflationa,ysources(seePart
11,
p. 9). This i s a considerable achievernent.
k s for 1958, the e s t i m b t e s given t o t h e s t a f f team i n d i c a t e t h a t
revenuenight be some. 3 t o l+ p e r c e n t h i g h e r t h a n i n
1957, w h i l e o r c l i n w
2xpen6itcres Q h t be reducedbyabout
2 t o 3 percent.
The r e d u c t i o n i n
exgen2itures i s nronosed t o be aclxieved by a c u t i n m i l i t c r y o u t l q s .
.La
i n c r e a s e ir! r e v e n u e ,d e s p i t e somedownwerd
adjustment i n t h e income tax
r a t e s for lower income groups, i s e s p e c t s d a s a r e s u l t of f u r t h e r inyxovem n t i n tax c o l l e c t i o n and highereconomicactivit;..
The expectedsurplus
cf sone D r 1.2 b i l l i o n ( a s a g a i n s t D r 175 m i l l i o n
on the ordinary budget
achieved in 1957 1 i s to beused f o r f i n e n c i n g p a r t of c considerabPJ
enlargedinvestmentbudget.This
i s t o 5e increased!by some 23 p e r c e n t
f r o m Dr 2,231, rniLli.cn i n 1957 to Cr 2,750 n i l i i o n i n 1956. The authoril957 they w i l l finance investment expenditures
ties expect that as in
without,recourse t o c e n t r a l b a r k f i n a n c i n g .I nf z c t ,i no r d e rt oa v o i d
recourse t o t h e c e n t r a l 3 a n k , t h e G c v e r r m e c t r e s i s t e d t h e p r e s s u r e t o
Take s c b s t a n t i a l tax reductions.

b ?. - i c en p p o r t

6-

PART I

polic;r

? : b i l e t h e r e v:as a ~ u b s t a r k i s lL n l ~ r o v e m ~ t I n t h e b u d g e t , o t h e r governn?ent-sponsored f i E a n c i a l o p e r a t i o n s r e x a i c e d t h e s o u r c e
o f an inflationary
e q a n s i o nof purchasing power

Even b e f o r e t h e wzr, as a xeasure 0 2 social- policy as well

as an
i n s t x u l e n t t o s t i r n u l a t e t h e e>.rpansion of farm production and t o irnprove t h e
c u l t i v a t i o n net3oZ.s , tile Government t i r o u g h t h e A g - r i c - d t u r a l Bark a n d v a r i m s
i n t 5 e market -to m a i n t a i n p r i c e f l o o r s
p-oducers 1 cooperztj-ves,ir;terver,ed
f o r c e r t 4 - --odlJ.ct,~, e s p e c i a l l y f o r :.-Cleat, d r i e d i r u i t s and. o c c a s i o n a l l y
tcbacco.&T
%he p o s t ~ r a ry e a r s t h i s program v z s expanded t o i n c l u d e olive
o i l end some other prodccts azd
d s o certainiE?ortedcopmodities(having
great. influence on t h e c o s t of living) i n o r d e r t o n a i n t a i n a s t a 5 l e i n t e r n a l
As a r e s - d t of thesepeasures,theGovemnentbecane
a large
p r i c el e v e l .
s c a l eb u y e ra n ds e l l e r
o f a g i c 7 G t u r a lp r o d u c t s .
The funds necessar;.r for
t h i s o p e r a t i o n have been po:.eded
s i m e t h e end cf t h e war by t h e c e n t r a l
IT%S t o ,some extentconnteracted
by the
bank,Theirim*l.ationa=yeffect
blocking o f comterpa.rtfunds of U.S. 2id.
I nt n e l a s t two y e z r st h e
f i n a n c i a l l o s s e s e n t a i l e d i n t h s s e p r i c e s u p p o r t o ~ e r a t i o n swerecovered from
t h eb u d g e t .! < e v e r t h e l e s s ,t h e s ea c t i v i t i e s
o f t h e rjovernmerrb a r e a source
o f d m g e r o f i n f l a t l o n a r y press7.u-es.
I n 1957 theywereto
a largedegree
r e s p c n s i b l e T o r t h e p r e s s x r e on the balance of p a y n e n t s t h a t emerged toward
t h e end of theyear.
lis t h eh a r v e s t ::as e x c e l l e n t ,t h e
amount needed i n
1957 t o buy up lzrlleat and ot,her prodv.cts from the farmers
at the govermente s t a b l i s h e d f l o o r prices a o m t e d t o Over D r 1.7 b i l l i o n , o r aooct t h e i n c r e a s e
i n t h e mmey s q p l y vihich occurred ir, 1957.
Thile I n due coursethestocks
p u r c h a s e d v i t h t h e s e fllnds will be r e s o l d t o t h e p u b l i c a n d t h e s e fuqds nqy
thus revert to tile central
bm-k, d a r i n g t h e t i m e l a g t h e r e
i s a netexpansion
i n none7incoi;les financed by n o t e i s s u e .

There a r e t w o consequences o f t h e s e p o l i c i e s wkich, m i e s s d e a l t w i t h ,

mightincreasetheniLnerabi1it;T
o f i n t e r n a lp r i c es t a b i l i t y .
A s indicated
o f %he Go-Jerarne;ltts p r i c e i n t e r v e n t i o n p o l i c y i s t o
before,theobjective
szfegpard the economic i n t e r e s t of t h e s m l i p r o a u c e r s T ~ t i o u t i r q a i r i r , g t h e
o f t h e p r i c e mechanisr-.
However, she s o c l a lp r e s s u r e sa r e
such that
>,*,Torkin2
g r a d u a l l y t h e s e p o l i c i e s h z i t o Ice converted into instruments
t o raise the
noney incones o f t h e r v r a l p o p u l a t i o n w i t h o u t f - d ! r e g a - e t o t i l e p r i c e movensnt 011 t h e i n t e x a t i o n a l n a r k e t s for t h e i rp r o d x c t s .S i n c e
1953 t h e
weigk%e?ar.erage p r i c e s o f v h e a t , 1;obacco, c u r r a n t s , s u l t a n a s andoliTje o i l
were r a i s e 2 by percentages varying from a b m t 20 t o 60 p e r c e n t .

-i/

Ln a i d i t i o n , t h e Gcvemment di:ec%ed t h e A g r i c u l t u r a l Bank t oe x t e n d

low I n t e r e s t ; l o a n s t o p r o d 3 x e r s e i t h e r i n Lke f o r r of short-tern;
cu_tivatlon loans o r l o n g e y - t e r x e q i p m e n t andimprovemer_t l o a n s , i n
?reduction, b u t also t o e n a b l e Z a m e r s t o
or.7er t o i r d u c e i n c r a a s e d
a v o i d t h s n e c e s F i t y o f mortgaging t h s i r c r o p 50 t r a d e r s andnoneyl e n d e r s a t a v e r y tlgh i n t e l - e s t .

-7-

PART I

As long as t h e domestic 2roduction of wheat covered only

a f r a c t i o n of
i.nterna1 requirenents the wheat price policy
of t h e G o v e m e n t h a d o n l y
a
margin21 e f f e c t on t h e c o s t of l i v i n g o f t h e c i t y p o p u l a t i o n .
The landed
import p r i c e of wheat was considerably lower Ynan t h e p r i c e p a i d t o d o m e s t i c
producers, and the average
sales p r i c e t o t h e consumer was c l o s e t o t h e
knportprice.
The measuredidnotcreatemonetarydisturbance.
Eovrever,
as ir,ternal production has increased, the policy of steadily raising the
p r i c e of wheat paid t o domestic producers has created considerable problems,
e s p e c i a l l y in 195'7 when the GovernLent purchased from domestic producers
nearly t h e full m o u n t needed f o ri n t e r n a lc o n s u n p t i o n .
Should t h e GovernEient i n s i s t on xaintaining the current price of bread, the present domestic
..-,,,lieat . pu.rch2se p r i c e p o l i c y will e n t a i l c o n s i d e r a b l e l o s s e s v h i c h will
have t o b e covered from the budget, thus reducing the expected surplus
which tile Government intendstodevotetoinvestmentpurposes.
Should,
hoxever, t h e p r i c e o f breadberaised,there1;ercussions
on t h e c o s t of
l l v i x g x o u l d bring about rerxrrecl p r e s s w e S j r workers and salaried people
f o r i r c r e a s e s iy vnges.
"

!.meover,thesuccessiveincreasesinthefloorprices
of wheathave
Government t o a d h e r e t o t h e p r i n lnede it i r c r e a s i n g l y d i i " f i c C L t f o r t h e
ciple that in rela'iion
t o 211 o t h e r r g r i c u l t u r a l p r o d u c t s it s h a l l i n t e r vene only t o t h e e x t e x t n e c e s s a r y
t o prevent the exploitation of the
snall
producers by t r a d e r s a n 2 t h a t t h e i n t e r v e n t i o n
v & l l n o t go beyond t h e
p o i n t a t which i n t e r n a l p r i c e s mightbe r a i s e d t o a l e v e l e n d a x g e r i n g t h e
rnarketaSility o f t h e s ep r o d u c t s on loreignmarkets.Considerablestocks
of unsold tobacco, currants
and t o some e x t e n t c o t t o n , i n d i c a t e t h a t t h i s
p o i n t was already reached even though
some e x c e p t i o n a l f a c t o r s a l s o played
aninportantrolein
t h i s development, e.g., t h e l a r g e low gradetobacco
crop i n 19.57.

The p r e s m t i n t e r v e r - t i o n p o l i c y deprives t h e econony of the a d a p t a b i l i t y

Yet it i s f r o n i n c r e a s e d
t o mee'c unexTectedcoKpetition on foreignmarkets.
exports of a g r i c u l t u r s l p r o d u c t s t h a t i n t h e n e a r future a strengthening o f
Greece'sbalance cf t r a d ec a n be hoped for.
I na d d i t i o nt h ef i n a n c i n gw i t h
c e n t r a l bank money of the accumulation of l a r g e s t o c k s i s bound t o c r e a t e
It i s u n l i k e l y that a t s t r a t e g i ct i m e ss u f f i c i e n t
mon2tarydisturbances.
c o u n t e r a c t i n g measu.res i n khe f i s c a l and c r e d i t s p h e r e c o u l d b e t a k e n t o
l-z$tigate t 5 s effect,,

._

In r e c e n t y e a r s t h e
Government has made a d e t n r r r i n e d e f f o r t t o achieve
a l a r g e d i v e r s i f i c s t i o n of agricult-u-al prochction and t o encourage the
E y 1957 considerablesuccess
ms
c u l t i n t i o n of Ia'sor-intensivecrops.
r e g i s t e r e d in t h i sr e g a r d as i n d i c a t e di n Table 4, P a r t II. Indeed f r u i t
azdvegetakles Sr-carne a growingforeign zxchaKge e a r n e r .
The p o t e r , t i a l of
t55.s s e c t o r of a g r i z u l t u r e i s considerable and I n t h e vie.l;. of t h e a u 5 h o r i t i e s
Greececould 3ecoze an 5.npofizxt s - q p l l e r of f r u i t s and v e g e t & l e st h e
growing Central I3xopez.n n a r k e t s .i nt h l sr e g a r d
t o o t h ep r i c es - J p p o r t
9olicy a s p r e s e n t l y p r a c t i s e d i n r e l a t i o n
t o v:heat ray, if it dces not
ecdmger, a t l e a s t s e r i o u s l y r e 5 a r d t h e
cieT.+ionment of this pronising progrm.
Hence, for r e a s o n s rr.entior,edabove,
it would seem n i g h l yd e s i r a S l e
tk%t h e ?reserit p r i c e _eu?po;.rt p o l i c y be reconsidered.

- 8 -

C.

P.CRT I

Credit policy

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 i r s a t i s f a c t i o n w i t h t h e e f f e c t
of the measures introduced in the middle
of 1956 a s d e s c r i b e d i n Sr.r/56/22.
These neasures were designed to strengthen confidence
i n t h e drachma, t o
system and t o i n c r e a s e
il2duce thechanneling of s a v i n g s i n t o t h e b a a k i a g
t h eu s e o f ba-rlk money i n t h e economy. To a c h i e v et h i s , i n themiddle of
1@56t h e m o n e t a r y a u t h o r i t i e s r a i s e d t h e
i n t e r e s t r a t e on s a v i n g s d e p o s i t s
5 t o 7 p e rc e n t .
,kt t h e
from 7 t o 10 p e r c e n t and on current deposits from
saTe time t h e y r a i s e d t h e m a x i m u m l e n d i n g r e t e s of the banks from 10 t o 1 2
p e rc e n t( i n c l u d i n g
bank charges).Thesemeasures,togetherwiththefact
t h e t p r i c e s remainedstablethroughout1957,contributedgreatlytothe
r a p i d rise i n savlngs and o t h e r d e p o s i t s v i t h t h e c o m e r c i a l b m k s ,
and
caused a s i g n i f i c a n t d e c l i n e i n p r i v a t e h o a r d i n g
ofgold.Savingsand
t k e d e p o s i t s b e t w e e n t h e endof 1956 and t h e end of 1957 increasedfrom
D r 1,627 m i l l i o n t o E r 3,802 million o r by 134 p e r c e n t .
The p r i c e of t h e
l e v e l p r e v a i l i n g i n 1956. I n t h e
go12sovereign i n 1957 remainedbelowthe
course of 1957 t h e Bank ofGreecewas,
i n f a c t , an occasionalpurchaser of
gold sovereigns from the public.
The e n c o u r a g i n g r e s u l t s of t h e s e m e a s u r e s a l l o w e d t h e a u t h o r i t i e s a s
of Jmuarg. 1, 1358 t o l o w e r t h e d e p o s i t r a t e s
on current account from 7 t o
5 p e r c e n t andon time deposits from 9 t o 8 per cent.l/ The a u t h o r i t i e s
have,hoblever,
r e t a i n e d t h e maximum permissiblelendingratesat
12 per cent.

It v e s expected by t h e a u t h o r i t i e s t h a t t h e w i d e n i n g o f t h e
interest
r a t e margin i n f a v o r of the banks together with growing deposits
would l e a d
and bring about an actual
t o a more intensivecompetitionbetweenthebanks
U n t i l now
d e c l i n ei nl e n d i n gr a t e sw i t h o u ti n t e r f e r e n c eb yt h ea u t h o r i t i e s .
t h i sh e sn o tt a k e n' p l a c e .I no r d e rt og u i d el e n d i n gb yt h eb a n k si n t o
government-desiredchanizels,
inadditiontothe
above i n t e r e s t r a t e measures,
theauthoritiescontinuedtomaintainvariousquantitative
and q u a l i t a t i v e
c r e d i tc o n t r o l s ,
The basicreserverequirements
o f 8 p e r c e n t on a l l depos i t s was supplemented, if seasonal o r othercircumstancesappeared
t o require
it, byanadditional
reserve percentage, (.e.g., i n Februzry 1957 anaddit i o n a lr e q u i r e m e n t of U , p e rc e n t was imposed). The a u t h o r i t i e s havealso
e s t a b l i s h e d s p e c i a l c e i l i n g s on c r e d i t s t h a t c o u l d be g r a n t e d t o v a r i o w
s e c t o r s i n t h e econoniy. Noreover, i n t h e i r d e s i r e t o
encourageinvestrnent
activity they decreed that the comercial
banlrs must h o l d 30 p e r c e n t
(above the conpulscry requirement nentioned
above ) of a l l d e p o s i t s a c c r u i n g
s i n c e J u l y 1, 1957, u p t o an amount e q u a l t o 10 per c e n t of a l l d e p o s i t s ,
were used
i n a specialaccountwiththe
Be& of Greece, unless these funds
Tor m e d i m - t e r ml o a n sf o ri n d u s t r y .T a k i n gi n t oc o n s i d e r a t i o nt h a ts u c h
i n thecourse o f
d e p o s i t s w i t h t h e Bank of Greeceincreasedconsiderably
1957, it s e e m t h a t t h e measure d i d n o t a c h i e v e t h e d e s i r e d o b j e c t i v e ,
although it wasa p o w e r f u l i n s t r u m e n t i n r e s t r a i n i n g c r e d i t e x p a n s i o n ,
which was not i t s primarygoal.

-1/

~~~~~~~

~~

.ks of 4 p r i l 1, 1958 t h e i n t e r e s t r a t e
on s a v i n g sd e p o s i t s up t o 100,000
drachmasvasreducedfrom
9 t o 8 Fer cent and on d e p o s i t s above t h a t
amount from 7 t o 6 per cent.

- 9 -

PART I

Despitethesemeasures
and theencouragjngdevelopment
i n savings depos i t s ? t h e mo:leg supply i n 1957 increased by 17 per cent, from
Dr 9,411
cilLio:i a t t h e e n d o f
DecemSer 1956 t o Dr 11,276 m i l l i o n a t t h e endof
Lkcenber l?57. T h i s v a s n e a r l y t w i c e t h e r a t e
of t h e growth i n r e a l
n z t i o n a ln r o d c c t .
The prlma,T reasonforthisexpansion,whichthemonetary
by t b e Bankof
Greece
a u t h o r i t i e s vLew with concern, was the credit grant,ed
d o agricultuye, partl;r through the intermediary
of t h e A g r i c u l t u r a l Bark o f
Greece and p a r t l y d i r e c t l y t h r o u g h c e r t a i n
government-sponsoredmarketing
o r g a n i z a t i c n s , and t o t h e Government i t s e l f ' f o r f i n a n c i n g i t s p r i c e s u p p o r t
I n f a c t , almostthewhole
of t h e
operations of a g r i c u l t u r a lp r o d u c t s .
t ot h e s ef a c t o r s .
Commrexpansion i n t h e money sq~pl;. couldbea'ctributed
ciel bank c r e d i t expavlded by E r 2,346 F i l l i o G o r some 45 p e r cent i n the
course o f 2.957, b u t s a v i n g s ar;d t i r i e d e p o s i t s w i t h
the commercial ba-riks
increased by Dr 2,236 n i l l i o z l .
L

The Greek r e p r e s e n t a t i v e s i c l l c a t e d t h a t t h e y
were f u l l y aware of t h e
i n f l a t i o n a r y Ganger t h a t m y arise f r m t h i s de-elopment.They
explair,ed
t h a t t h e problem of f i n z l c i n g a g r i c u l t u r e and of p r o v i d i n g s u f f i c i e n t f u n d s
f o r i n d u s t r l a l e x p a n s i o n fro-. noniniclationa,y sources i s a t p r e s e n t t h e m a i n
preoccupatlon of t h em o n e t e r ya u t h o r i t i e s .C r e d i t st oa g r i c u l t u r ea r e
provided by the LgricuZtural
Bad< of Greece a t p r e f e r e n t i a l r a t e s G f i n t e r e s t
of sround 6 o r 7 percent.
3;ctil r e c e E t l y i n t e r e s t p a i d
by thebanks(inB a r k ) or? d e p o s i t s was a t l e a s t '7 percent.
In tkis
c l u d i n gt h ef g r i c u l t u r a l
sit:letion the .igricu;tural
%a& could accept deposits without
l o s s only if
it r e d e n o s i t e ds u c hf m d sw i t ht h ec o m e r c i a lb a n k s .
For i t s own l e n d i n g
purposes it had t o r e l y 03 funds from the central
3enk which it received
a t a p r e f e r e 2 t i a l r a t e of 1.5 percent.
(The r e g u l a rr e d i s c o u n tr a t eo f
t h e EP:& or' Greece i s 11 per cent. )
- 7

!':hen t h e p u b l i c , i r i c l u d i n g t h e f a r m e r s , a b s t a i n s d f r o m d e p o s i t i n g t h e i r
savingswiththebanks,theauthorities
f e l t that; apart from limiting overa l l l e n d i n g t o t h e f g r i c u l t m a l Bank they could do l i t t l e t o p r e v e n t t h e
i n f l a t i o n a r y f i n a c c i n g of e g r i c u l t u r e , g i v e n t h e 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
:inichthefarmers
en:oyed, themaintenanceofwhich
was a firm governnent
policy. ILok: t h a t measures t or e s t o y ec o n f i d e n c e
i n t h e drachmahavemet
with success and d e n o s i t s i a o t h e r benlcs have r i s e n s u b s t a n t i a l l y , t h e
msne5aq- a a t h o r i t i e s f e e l t h a t g r a d u a l l y t h e y
w i l l a l s o be a31e t o reduce
t h i s source 02' i n f l a t i o n a r ye x p a n s i o n of t h e money supply. They consider
t h a t t h e l o v s r i n g or' t i l e c e p o s i t r a t e by 1 o r 2 p o i n t s belowthe1er;ding
r a t e of t h e. & g r i c u l t u r e l Bank i s alyeady a considerablestepforward.
k
1 p e r c e n t s p r e a d beti.Jeen d e p o s i t s ar?d l e n d i n g r e t e s lriay x o t b e s u f f i c i e n t
of t h e. & g r i c u i t u r s l Eank. Hovever, now t h a t
t o covertheoperatLr?gcost
t h e d e p o s i t r a t e s havebeenlowered,thei-gricultural
Bank i s i n a p o s i t i o n
- t o acce$ d e p o s i t sw i t h o u t a loss. Noreover,togetherwiththeearnings
vhich i t would make on fundsborrowed f r o 3 the centre.1 bank, the spread
between i t s averageborroving and l e n d i n g r a t e s n i g h t b e s u f f i c i e n t t o
I n t h i s vay, as a f i r s t step,themonetary
cove? operatingexpeaditures.
a x t h o r i i i e s hope t o r e d u c et h ei n f l a t i o n a r ye x p a n s i o n
of ooney supglyo I n
due coursethey hope t h e t t h e y w i l l beable t o a d j u s t t h e i n t e r e s t r a t e
s t r u c t u r e s o a s t o c r e a t e anenv5ronment i n v h i c h t h e A g r i c u l t u r d Eank
would become n c t 0111s a m a j o r l e n d e r b u t a l s o
E s i g n X i c a n t c o l l e c t o r cf
smingsfromthefarmingcommnity.Moreover,
i n such anenvironment,the

10 -

P4RT I

A g r i c u l t u r a l 3 z n k couldsecure on t h e money merkettheadditionalfunds

which i t mihhtnscd t o satis?; thecredi.trequil-ements
of t h e r u r a l community. With i t s widespreadbl-anches and i t s r o l ea sa d v i s o r
on e g r i c u l t u r a l
p r o b l e m , i t i s f d e a i l y s u i t e d t o becomea
najor c o l l e c t o r o f fzrmsavings.
The LgricuLturei Bank rnain%ains a l a r g e staff o f a g r i c u l t u r a l e x p e r t s which
prcvides technical acsistance to the farmers, with
whom t h e Bank t h u s h a s a
s p e c i e 1r e l L t i o n of n u t u a lt r u s t .
It i s r e a l i z e d , o f c o u r s e ,t h a tt h i s
hoped for ?regress can be made only if t h e r e c e n t l y e c h i e v e d p r i c e s t a b i l i t y
i s meintained and strengthened. I n view of t h i s f a c t t h e s t e f f
team f e l t
t h a t t h e Greek a u t h o r i t i e s s h o u l d p u r s u e e n e r g e t i c a l l y t h e p o l i c i e s a k i n g
at reducing the dependence
of t h s . & p r i c u l t u r a l Bark on c e n t r a l bank funds,
do n o t p=.odu.ce s a t i s f a c t o r y r e s u l t s , shoLzld
an2 as long a s t h e s e p o l i c i e s
zounteracttheinflationazyiclpact
of i t s l e a d i n g t o t h e A g r i c u l t u r a l Eanlc
( a ) byreducingtheanountprovidedtothekgricultural
Bank for the extens i o n of co:rsaTptionloans t o t h e f a r m e r s
and (3)by taking contractive
rneasxres i n r e l a t i o n t o o t h e r s e c t o r s of the econony.

I n Eddition t o t h e pollc.; 0," pz-evTding i n c e n t i v e s t o t h e p u b l i c t o

d e p o s i t t h e i r s a v i n g s and o t h e r f u n d s w i t n t h e b a n k s , t h e a u t h o r i t i e s
were
also preoccupied with memures vhich xould induce the banks
t o Len4 for
developxentpurposes.
I n o r d e rt of r e er e s o u r c e sf o rt h i sp u r p o s e ,s t r i c t
l i n i t s a r e s e t by t h e m o n e t a r y a u t h o r i t i e s t o t h e
amount of f i n m c i r g o f
i q o r t t r a d e and d o m e s t i c t r a d e t h a t c a n
5e uGdertaken by c o m e r c i a l bcnirs.
Kevertheless,theexpansion
i n i n d u s t r i a l c r e d i t i n 1957 w 2 s l a g e l y shc?rttern? f o r working c a p i t a l purposes. To enccuregeinvestment i n f i x e d a s s e t s
c o m z r c i a l b a n k s were required, as indicated
above, t o reseme for medium18 months) 30 per cent of a l l d e p o s i t s
andlong-term
irkiustrialloans(over
a c c r u i n g s i z c e 2 u l y 1357, up t o an amount of 1C p e r c e n t of ell Zeposits.
rs indicatedabove, it a p p e a r st h a t it i s d i f f i c u l t t o f o r c e t h e
commercial
bsriks t o a l t e r t h e i r s t a n d a r d s f o r e l i g i b l e l o a n s
or to take the initiative
i n organizingdexand for l o a n s for private productive purposes.
The Greek a u t h o r i t i e s e x ? r e s s e d t h e
hope t h a t i f thesefundserenot
losnedtoFrivsteindustrytheycould3enobilized
f o r government and o t h e r
of s e c u r i t i e s . F o r t h a t purpublicdeveloprient9rojectsthroughthesele
pose t h e m t h o r i t i e s a r e
making a n z j o r e f f o r t t o o r g a n i z e a n a c t i v e
wzs passed l a 1957 t o p r o v i d e f o r t h e
issue
c a p i % a lm z k e t .L e g i s l a t i o n
or" new s e c u r i t i e s , b o t h by t h e Government a d b y p r i v a t e and sen;i-pzblic
of f i x s di n v e s t n e n t .l i i e sm
ei
e n t e r p r i s e s , t c r e i s ef u n d sf o rf i n o n c i n g
s o c u r i t i s s me t o have s e v e r a l a t t r a c t i v e f e a t u r e s s u c h a s g e n e r o u s
and
ts: e x e n p ti n t e r s s t , an6 a d o L l a r or p r i c e i d e x c l a u s e .
It i s hoped t h a t
by t h e p u b l i c , a s w e l l
2s by cormercial banks and
t h e y w i l l bewidelyheld
persionfunds.
The f i r s t issue (300 n i l l i e n drachmas ) of t h new iype
bondshasbeen
rnade ( A p r i l 1958) by t h eP d b l i c P0we.r Corporation. The bonds
b e e rf r e ei n t e r e s t
cf S perces<
and t h e i rc z F i t a 1v a l u e
i s l i n k e dt o
t h e doiLer, o r t o t h e p r i c e
of e l e c t r i c c u r r e r _ t , a t t n e b v e r s ' o p t i o n .

The Gree:: a u t h o r i t i e s r e a l i z e d t h a t some of t h e f e a t u r e s or" t h e newly

i s s u e ds e c u r i t i e sa r er a t h e rg e n e r o u st oi n v e s t o r s .
They f e l t , however,
up t h e e s t a b l i s h m e n t
thptsuchprovisionswerenecesseryinordertospeed
of a c a p i t a l n s r k e t .
.A reasonably well f u n c t i o n i n g c a p i t a l m a r k e t , i n t h e i r
f aciliiatetheachievenent
of theGovernment'sdevelopvlew, could greatly
ment objec'l ves.

- 11 -

PART I

The stafr" team,whileexpressing

f u l l a p p r e c i a t i o n of t h e e f f o r t of
t h e mo3etaq- a G t h o r i t i e s whichwent i n t o t h e c o n s c l i d a t i o n of t h e money
would take t h e
and banking system, ex?ressedthe hope t h a t t h e a u t h o r i t i e s
necessaq- xeasures to prevent f'urther inflationary expansion
of t h e money
sup$.y.lirithout
r e s t r a i n t i n t i e expansion of t h e money supply,therecent
h p r o v e a e n t i n L l e balance of p a p e n t s on currentaccountmightbeendanof papnents on current
gered. A s c b s t a n t i a l d e t e r i o r a t i o n i n t h e b a l a n c e
accountwould,through
i t s psychological b p a c t , j e o p a r d i z e t h e r e c e n t l y
re-establishedconfidence i n thenationalcurrency.

No doubteconomicdevelopment
wouldbe s u b s t a n t i a l l y f a c i l i t a t e d b y
an i n f l o w of l o n g - t e r m f o r e i g n c a p i t a l . I n t h i s r e g a r d t h e e f f o r t
of t h s
Goverment to attract foreign funds both pivate
and o f f i c i a l f o r inv9s-tment i n p r o d u c t i v ee n t e r p r i s e s i s wellspent.
however, t h e s e e f f o r t s c a n
besuccessful onLy if i n t e r n a l s t a b i l i t y i s maintained. Above a l l , monetary
s t a b i l i t y wouldprovide an i n t e r n a l e n v i r o n m e n t b e s t s u i t e d f o r t h e
augmsnt a t i o n and propermobiliz&ion of domesticsavings.
If economicdevelopment
i s t o be successfcl,
it h a s t o rely on a broad national e f f o r t which e x t e r n a l
resourcescouldusefully
and s t r a t e g i c a l l y supplement b u t notreplace.
It
i s f o r these reasons that the
staff team f e l t t h a t u r g e n t c o n s i d e r a t i o n
of reducing goverment and X g r i c u i t u r a l
should be given to measures capable
Bank r e l i a n c e on c e n t r a l bank financing.
"

3.

Ealence o f n m e n t s develonnen5.s

Balanceofpaynentsdevelopments
i n 1957 a r e shown i n Table 1 below.
A s conpareit t o 1956 t h e r e was a f u r t h e r improvement i n t h e b a l a n c e of paymellts on currentaccourtt.
The 1956 d e f i c i t o f $112 n?illion was reduced
i n 1357 t o $90 m i l l i o n . However, t h e u t i l i z a t i o n of U.S. a i d f e l l sub.stanc
b i a l l y i n 1957. It m o u n t e d t o $23 m i l l i o n as compared t o $68 m i l l i o n i n

1956. Moreover,Greeceextendedunder
t h ee x i s t i n gb i l a t e r a lt r a d e
and
paymentsagreements c r e d i t s t o i t s t r a d e p a r t n e r s i n t h e m o u n t
of $10
million.Consequently,
i no r d e rt o
meet i t s e x t e r n a l payments o b l i g a t i o n s ,
t h e gold an2 foreign exchazge holdings of t h e Bank of Greecehad t o be
reduced by $21 m i l l i o n , t o a b o u t
$179 m i l l i o n a t t h e end of 1957.

The main f a c t o r i n t h e improvementof the bslance of payments on

current account WES the contiaued sharp
r i s e i n r e c e i p t s frcm i n v i s i 5 l . e ~ ~
p r i m r i l y s e m e n ' s and emigrants'remittances,
and fromtourisn.
Under
these three headings together receipts increased
by c l o s e t o $40 m i l l i o n
1955 ( $ U O n i l l i o n ) . I n view of t h i s
o v e re a r n i r g sf r o mt h e s es o w c e si n
i n c r e a s e , e a r n i n g s f r o n s e r v i c e s and donations, on a n e t b a s i s , n e a r l y
The Greekrepresentativespointedoutwith
equaled recei3ts fromexports.
n e t r e c e i p t s from t o u r i s t t r a d e , a s
satisfactionthecontinuousincreasein
it r e f l e c t s t h e f r u i t i o n of considerable investments undertaken i n r e c e n t
y e w s i n t o u r i s t ~ccommodationand otheri'.'scilitFes t o a t t r a c t f o r e i g n
was a
v i s i t o r s . The G r e e kr e p r e s e n t a t i v e se x p l a i n e dt h a tt h e i rc o u n t r y
considerabledistanceamyfromthe"regularroute"
of t h e h e r i c a n and
NothernEuropeantourists.
Eence t h e i r c o u n t r y misses many o p p o r t u n i t i e s
i s handicappedby
inthisregard.
The a c c e s s t o Greece by land,moreover,
d e f i c i e n tY u g o s l a vr o a d sl e a d i n gt ot h e i rc o u n t r y .
They expressedthe hope
that current cegotiations with Yugoslavia
may l e a d t o an improvement i n

- 12 -

EMIT I

t h i ss i t n a t 5 o n .
To f e c i l i t a t ea c c e s st ot h e i rc o u n t r y ,t h e
Greek a u t h o r i t i s s
a r sa l s oc o n s i d e r l n gt h ee s t a b l i s h r c s n t
of a f e r r y s e r v i c e betweer. P a t r a s ( o n
of Greece) and a southe;-n I t d i a n p o r t . I nt h ec o u n t r y
itself
thewestcoast
t h e Govsr-nnent e?nd t h e i n t e r e s t e d i c s t i t u t i o n s havesteppedupinvestment
in
t o u r i s t accommodation and otherfacilitZes.Thisencouragedthe
Greekrepres e n t a t i v e s t o believe t h a t net:earnings from tourism will continue t o riss
i n t h e n e x t few ye zrs.

1956
1.

2.

3.
4.
5.

6.

7.

8.

Exo o r t s
IE;orts (c.

S m r c e s :3 a s e d

223

i.f. 1

Tra2e balance
Ke t s e m i ce s
Donations
Balence ( 3 9 4 3 5 )
F r i v a t e c a p i t a l ( n e)t
Investment
Trade c r e d i t s
Other
Financing of the deficit
U.S. a i d
Cle aringb d a n c e s
Gold and f o r e i g n exchange
EFU c r e d i t
Gthe r

1957
521

"

-298
122

86
-90

55

"

31

31

-7
35

23
-10
"

-2

21
2

-1

on f i g u r e s of Bank of Greece and U.S. I.lissiontoGreece.

"
"

"

The r e - e s t e b l i s h - e a t of i n t e r n a l ar,d e x t e r n a l cor!!idence i n t h e drachma

h a s brodght ernigract remittances acd capital repatrietion back into banking
chmnels. The l a r g ep o s t w a re m i g r a t i o nh a sg r e a t l y
augmentsd t h i ss o u r c e of
f o r e i g n exchangeearnings.
However, theGreekrepresentativespointed
out that
t h e vol7-e
of emigrant remittances 5s greatly dependent on t5e l e v e l of a c t i or' Greekernigrtition,prixariPJthe
U.S.B., Cantidz, and
vityinthecountries
Australia.
LGnile t h e i n c r e a s e i n e a r n i n g s f r o m i n v i s i s l e s
was s a t i s f a c t o r y , t h e Greek
representatives expressed concerr; about the trzde balance whic5
showed a l a r g e r
d e f i c i t i n 1357 (:j29& m i l l i o n ) t h m i n 1956 ($282 m i i i f o n ) . The d e t e r i o r a t i o n
was p r i x a r i l y due t o a f u r t h e r rise i n i n p o r t s which increased 3y 3 p e r c e n t .
Experts, whichhouevercovered
x l y 43 percent o f t h e i x p o r t b i l l , have a l s o
The i n c r e a s e i n e x ? o r t s
m s a l m o s te n t i r e l yd u et o
r i s e n byabout 15 percent.
i n c r e a s e dr e c e i p t s f r o n t o b a c c os a l e s .
The s c b s t a n t i a li n c r e a s eo v e r
1956 ($23
m i l l i o n ) was l a r g e l J due t o s i g n i f i c e n t s a l e s or' s t o c k s c a r r i e d o v e r f r o n 1956.
There was a l s o an e n c o u r a g b g r i s e i n e x p o r t s of f r e s h f m i t and v e g e t a b l e s t o
WesternEurope.
The rise i n exTorts of t h e s et h r e e items more t h a n compensated
f o r t h e f z l l i n t h e e x 9 o r t s of c o t t o n whichhad become, i n t h e c o u r s e of t h e
of f o r e i g n exchange for Greece(seeTable
17,
l a s t few years, an inportant souzce
? a r t 11). The f a l l - o f f i n co-lton e x p o r t s was notdue
t o 8 weaker crop. Rather

- 13 -

PbRT I

it wss t h e r r s u l t o f i n c r e e s e d i n t e r n a l coxsu?lpt4onand,mainly,unexpected
n z 1 : e t i n g d i f f i c u l t i e s on the newly e s t a b l i s h e d m a r k e t s of t h i s e x p o r t item
(Frcnce,Ztaly).
ThelTe T V E S a i'all-oi'f
i n r e c e i p t s frola mineralexports, due
t o a f a l l i n den~and and ilz p r i c e s of t h e s e procluctsonvorldrrarkets.
Imports rose despite
an e x c e l l e n t h a r v e s t i n c e r e a l s and o l i v e s which
reducedthelargeimport
b i l l for f o o 6 i t e m . The i n c r e e s e i n i n p o r t s was
thus concentrated nainly
on machirleq- and equipment i n c o m e c t i o n w i t h t h e
program.
It wzs a l s o a resv.1-t or" t h ei n c r e a s e d instepned-upinvestment
p o r t s of x t e r i a l s for i n c h s t r i a l p r o ? . u c t i o n ar,d increased consuner goods,
reflectingtheincreasedindustrialactivityinthecountry
and thedenand
c r e e t e d br a considercbleincrease
i n t h e incomes of thefarmers and merchantsdepencent on f e r n e r s l tyEde.
i h e r i s i n g l e v e l of i x p c r t s c m s e s concern t o t h e Greek a u t h o r l t i e s .
s h o u l d l n p o r t sc o n t i n u e
The Greek rcpreseiit.&ivas expressed the fear that,
t o riseattherake
of t h e L a s t half o f 1957, t h e r e mightbe a s e t b a c k i n
pa:;?r.e:lts
on goccis and s e r v i c e s a c c o u n t
t h e improvement o f thebzlance of
zcbievecl i n r e c e n t y e a r s .
They n o i n t e d o u t t h e t i n t h e
f i r s t q u a r t e r of
19% p r i v a t e impoPtscontinued 50 rise. They ly'ere scne 2.3 percenthigher
was
t h a n i n t h e f i r s t q u a r t e r of lS57. Idhile e x p o r t sr o s e ,t h ei n c r e a s e
small. Nor is t h ee x ? e c t a t i o nf o rt h er e s t
of t 5 ey e s rf w o r & l e ,b e c a u s e
tobecco and 2 r i e d fruits a r e e,.;pected t o e r c o u n t e r n a r k e t i n g d i T f i c u l t i e s
I:et r e c e i F t s f r o m i c v i s i b l e s i n
t h e view of -the Greekrepresenta&road.
t i v e s Eight not increass sur"ficient1;; to prevent
i n %he coarse of 1958 a
widening o f the gap between earnings an6 expen6itures
i n the balance of
paymeats on goods and s e r v i c e s acco1mt.
F!

I n r e c e z t g e a r s 3.S. a i d c o n s i s t e d t o
surplus ccmilodities,es?eciallyrJheet.Inview

a l a r g e d e g r e e of a g r i c u l t u r d
of t h er e c o r dh a r v e s t ,
Greececould a3sorb ozl1.y a mwh smaller volume of suchessistance &Id,
slkhongh there W B S e n i n c r e a s e d a l l o c s t i o n
of a i d u t i l i z a b l e for o t h e r
i s anincreased
pi-chases,thebelief
was e s p r e s s e d t h a t u n l e s s t h e r e
flew of f o r e i g n c a p i t e l and u n l e s s i m p o r t s a r e r e s t r a i n e d f r o m r i s i n g
f:lrther, Greece xight have t o s u f f e r a f u r t h e r r e d u c t i o n i n m o n e t a T
rssemes. Ehile t h e reserves tire a t a s c t i s f a c t o r y l e v e l (about $180
m i l l i o n a t t h e end cf March 19581, even a r e l a t i v e l y modest r e d u c t i o n
might provoke adverse pspchol~gical reaction
from t h e p u 3 l i c w i t h d e t r i m I z t a l e f f e c t s on confidence i n t h e n a t i o n a l c u r r e n c y .

In order to forestall such

a developeRt, the authorities are
cons i d e r i n gs p e c i a lc r e 2 i tp o l i c ym e z s u r e st or e s t r a i ni m p o r t s .
The Greek
r e p r e s e n t z t i v e s r e i t e r e 2 e d t h e Government s p o s i t i o n a g a i n s t any intenkt t h e same timetheyexpressed
s X i c e t i o n of q d a n t i t a t i v er e s t r i c t i o c s .
of thecomposition or" Greek e x p o r t s , t h e Government
the viev that becaue
hopes t o Lxnrove thei:marketingabyoad
by e x p a n d i n g t r a d e w i t h c o u n t r i e s
coz2uctizg thefr trsde vithin the
framework of b i l a t e r a l t r a d e and payments
tigreexents. The Goverraenthopesthat
i n t h i s wxf i t canreduce i t s l a r g e
tradedeficitwithliestern
Europeancountries,assuchagreementswould

-u-

PkRT I

enableCreece t o i m p o r tb s s i ce s s e n t i e l s ,e . g . ,
o i l , t i x b e r ,a a c h i n e r y ,
f r o m b i l a t e r a l agreement couatrles, especially
from t h e S o v k t bloc
countries. It seerns,however,
t h a tp r o v i d e dt h eG m e r m e n te x e c u t e s
withdeterminatiorthecontemplatedmeasurestorestrictcredit
and
r e d u c et h ei n f l a t i o n a r yf i n a n c i n g
of a g r i c u l t u r e ,t h eb a l a n c e
of payments
expectationsofthe
Greek a u t h o r i t i e s m t y prove somerJhst pessimistic.
R e s t r i c t i o n of c r e d i t s t o consu:ners and t r e d e r s might r e l a t i v e l y q u i c k l y
reduce demand f o r imports. lvloreover, it i s q u i t e l i k e l y t h a t i n v r s i b l e
e a r n i n g sd g h tc o n t i c u et oa c c r u ea t
animproved r a t e ,D e s p i t et h e
recession?nthe
Cnited S t s t e s , e m i g r a n t r e m i t t a n c e s
my rise s t i l l
furthe;. because of the high rate
of e n i g r a t i o n ir, r e c e n t y e a r s t o
5y recession.Becauseof
AostrelFz end o t h e rc o u n t r i e sn o ta f f e c t e d
t h e i??roved t o u r i s t f a c i l i t i e s an6 t h e i n c r e a s e d volvme of t r a v e l ,
e s p e c i a l l y f r o m I J e s t e r n a d Gorthern Elaope, net receipts from tourism
mightalsoachieve
new records. However, i n m y c a s et h e r e i s need f o r
c a r e f u l f i s c a l and monettxtT policy.

- 15 4.

PART I

Restrictiv
s ye s t e m

a.

&orts

and exports

The Greek a u t h o r i t i e s p u r s u e a r e l a t i v e l y l i b e r a l i m p o r t p o l i c y ,
a l t h m g 3 a comxehensivesystemofstand-bycontrols
i s maintained. The
s t a f f TLssionpointedoutthedisadvantages
of t h i s s t a t e of a f f z i r s i n
It inquiredalsowhetherthe
c r e a t i n g u n c e r t a i n t y among exportersabroad.
spstexcouldnot
be s i F D l i f i e d and t h e e d m i n i s t r a t i v e a p p a r a t u s w h i c h . i t
e n t a i l e d be reiiuced.

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 c o n t r o i s
were r e t a i n e d a s
a safeguardincasetheymightbe
Eeeded. They were a l s o u s e f u l f o r obtzliniE
For i n s t a n c e , a f e a t u r e of thesystem i s t h a t a l l
s t a t i s t i c a li n f o r m a t i o n .
importsaresubjectto
an approval procedure for the purpose of obtainiry
f m e i g n exchange and Epplications are passed
on e i t h e r by a commercial b x A
o r by t 5 e B a r k ofGreece,according
t o t h e n a t u r e of the y-oposed transaction.
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 t h e
main purpose of this procedure
is toenzblethesank
of Greece t o keep track o f f o r e i g n exchangerequirements
of t h e c o r m e r c i a l b a n k s , k c l u d i n g t h o s e t h a t
will f a l l due i n f u t u r e i n
payments forimportsprocured
on a time d r a f t b a s i s .
The procedure i t s e l f
i s speedy, and i n most c a s e sl p p r o v a l i s g r a n t e df r e e l y .m e r et h ep r o p o s e d
method o f payment f o r i m p o r t s i s d i f f e r e n t from t h a t p r e s c r i b e d ( f o r i n s t a n c e ,
payment i n d o l l a r s t o m EPU country)or where s u p p l i e r s c r e d i t e x c e e d i r g
I n any
t h er e g u l a t i o n time limit i s sought,approval mightbewithheld.
C B S R , a d e c l s i o n IVOUld be reached within
afew days.
?Lost i n p o r t s i n t o Greece 20 notrequi,-e a l i c e n s e . The exceptionsare
a category OT luxury goods, an6 a categoryofcertainproducts(simple
agriculturalmacninery,etc.)manufacturedinGreece.Imports
on t h e s e l i s t s
r e q u i r e l i c e n s e s fromthe?$inistryofTrade
and Indust=.y. I n 1956, i n p a r t s
1 per cent of t o t a l i m p o r t s and of t h e
of theformertypeanountedtoabout
2.5 percent.
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 ,
l a t t e rt y p ea b o x t
f i r s t category had been
h i t h e r t o , no a p p l i c a t i o n s f o r l i c e n s e s i n t h e
refused. I n t h es e c o n dc a t e g o r y ,t h ec r i t e r i af o rg r a n t i n gl i c e n s e s
were
txo: whet'ner t h e items requested were availablefromdomesticproduction,
and mhethertneintendedimport
was f o rp r o d u c t i v ei n v e s t m e n t .I n
1956 a3out
90 p e r c e n t o f a p p l i c a t i o n s f o r l i c e n s e s f o r i t e m s i n
t h i s c>ategorywere
appFoved.
tao:

The S t a t e h a s amonopoly for revenue or soclal p-mposes

of importsof
c e r t a i n a r t i c l e s suchasratches,kerosene,narcotics
and p l a y i n gc a r d s ,I n
as whea-L. The S t a t e
a d d i t i o n ,t h eS t a t ei m p o r t sc e r t a i nf o o d s t u f f s ,s u c h
alsoixportsotherfoodstuffs
and a g r i c u l t u r a l s n p p l i e s a t t i m e s
when it
is c o n s i d e r e d n e c e s s a r y t o do s o i n o r d e r t o s t a b i l i z e p r i c e s t o t h e
consumer.
framework of t h e 3,s. a i d
I n 1957, i n p o r t s u n d e r S t a t e t r a d i n g , m o s t l y i n t h e
prog-ram,were about 15 per cent of t o t a l i m p o r t s .
The Greek a u t h o r i t i e s , i n a d d i t i o n t o t h e g e n e r a l f i s c a l
and mcnetary
policies,have tried to
check t h e growth of imports, particularly imports
r e g a r d e da sl e s se s s e n t i a l ,
bymeans o fc r e d i tr e s t r l c t i o n s .C e i l i n g sf o r
importcreditaresetforindivialbanks,exceptforimports
of c e r t a i n
b a s i cf o o d s t u f f s .I m p o r tc r e d i tg r a n t e d
bycomrcercialbanks
i n c r e a s e di n

- 16 -

PART I

1357 p r o p o r t i o n a t e l y less thaqotherforms

of c r e d i t .I m p o r t e r sa r ea l s o
required to deposit with their banks at the time
of ~ p p r o v z l o f t h e i r
a p p l i c a t i o n a c e r t a i n p e r c a n t a g e of the drachma value of the transaction,
thepercentagedepending
on the type of i q o r t . ( S e e P a r t II, p.32 1.
An atternpt is a l s o made t o 2 . i m i t t h e amoun5 of f o r e i g n s u p p l i e r s ' c r e d i t
obtaina3le.Thedraftsare
only permitted i n payment for a r t i c l e s i n a
certaincategory,mainlyconnected
w5th productiveinvestment.
In s p i t e
of l i . ~ t a t i o n s , f o r e i g n s u p p l i e r s c r e d i t e x t e n z e d i n t h e c o u r s e
Of 1957
was over $30 million.Because
of concernoverthebalance
of payments,
considerationhasbeen
given t o nakingthesemeasures
more r e s t r i c t i v s .
Homever, t h e Greek r e p r e s e n t a t i v e s r e i t e r a t e d t h e d e t e r m i n a t i o n
Of t h e i r
Governmsnt a g a i n s t i n t e n s i f i c a t i o n o f q u a n t i t a t i v e r e s t r i c t i o n
on t r a d e
and payments

The Greekim?ort

r e g u l a t i o n sa r en o td i s c r i m i n a % o r y ,

and licensing
However,where
on currency
prescription,theapprovalprocedureforscreeningallocations
of foreign
exchange i s more e x a c t i r g .

i s a d m i n i s t e r e dw i t h o u tr e g a r dt ot h es o u r c eo fi m p o r t s .
proposedmethods of psyment depart from the regulations

-ports from Greece require licenses

and a l l proceedshave t o be
surrendered. From time t o t i m e ,e x p o r t so fc e r t a i n
items a r e r e s t r i c t e d
kn export tax on o l i v e o i l was removed i n
t o keep down domesticprices,

1957.

b.

N o n t r a dt rea n s a c t i o n s

Therehavebeenno
s i g n i f i c a c t changes i n Greek r e s t r i c t i o n s on nontrade
t r a n s f e r ss i n c et h el a s tc o n s u l t a t i o n s .C a p i t a lt r a n s f e r s
abroadcontinue
Greek emigrants
t o be p r o h i b i t e d i n p r i n c i p l e ,
and are c l o s e l yr e g u l a t e d .
must l e a v e t h e i r c a p i t a l b e h i n d .
However, t h e Greek representativesexplained
thateachcase
is consideredindividually and t h a t , f o r i n s t a n c e , t h e p r o c e e d s
of a housesold i n Greece by a f o r e i g n n a t i o n a l could be transferred gradually.
a l e g i s l a t i v e d e c r e e of 1953 f o r t h e
Foreign capital invested in Greece under
pronotion of productive investment can be repatriated after at least
one pear
from t h e d a t e of i m p o r t a t i o n , o r from the time t h e e n t e r p r i s e began t o operate
10 p e r c e n t ,
productively, a% an annual rhte not exceeding
Currentpaynentsabroad
are a l s o c o n t r o l l e d and r e q u i r e i n d i v i d u a l
l i c e n s e se x c e p tf o rt h o s ei nc o n n e c t i o nr i t ht r a d et r a n s a c t i o n s .
However,
9200 p e r p e r s o n p e r t r i p
and s t u d e n t s
touristsareautomaticalLygranted
are allowed X 2 5 monthly f o r Europe and +.225 f o r U.S,A. on showing t h a t
The Greak r e p r e s e n t a t i v e s a i s o e x p l a i n e d
they are e n r o l l e df o rs t u d ya b r o a d .
that,inspecialcases,rents,salariesand,pensionscouldbetransferred
i np a r t .I n s u r a n c e
companiescan t r a n s f e r 65 p e r c e n t o f t o t a l f o r e i g n
o b l i g a t i o r s ;t h er e m a i n d e rh a st o
bepaidbybranchesabroad.Transfers
ofdividends on e q u i t y c a p i t a l i n v e s t e d F c e r t h e
1953 law(seeabove)
may
not exceed 12 per cent per year
and t r a n s f e r s o f i n t e r e s t on l o a n c a p i t a l
may not exceed 10 p e r cent. However, 'mnualearnings below t h e s e limits
canbesupplemented5yearnings
i n excess o f such limits from other years.
? r e f e r e n t i a l t r e a k e n t may begiven t o s p e c i a l l y p r o d u c t i v e i n v e s t m e n t .
1953, r e a c h i n g n e a r l y
I n v i s i b l e paymentsabroadhave
more than dou5led since

- 17 -

PAZT I

$60 m i l l i o n i n 1957. Because of t h e r e c e n t loss i n r e s e r v e 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 it mou1.d notbeopportune
t o formalizethe
de f a c t o l i b e r a l i z a t i o nof r e s t r f c t i o n on c u r r e n t i n v i s i b l e s .
"

B i lca.t e r a l i s m
The number o f b i l a t e r a l a.greements i n whichGreece i s a p a r t n e r h a s
increased by folm s i m e t h e l a s t c o n s u l ~ t a t i o n s and t h e t o t a l i s now 32, of
mhich 1 2 arewith OZZC countries. The s t a f fm i s s i o ni n q u i r e dt h er e a s o n
f o rt h i si n c r e a s e .
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
many c o u n t r i e s
any o t h e r way and t h a t w i t h some c o u n t r i e s
xere not prepared to trade in
b i l a t e r a l t r a d e and paymentsagreements were u s e f u l as a mans of est a b l i s h i n g a f i r s t f o o t h o l d i n new n a r k e t s f o r Greek exports.
In the case of
EPU countries,quotas wsresometimesmaintained
onGreek
It was
e x p o r t s and q u a n t i t a t i v ea r r a n g e m e n t s had t o be negotiatedannually.
agreed that negotiation
was p o s s i b l e o n l y i n t h e n o n - l i b e r a l i z e d
area d
trade--quotas i no t h e rc a s e sb e i n gm e r e l yi n d i c a t i v e
lists. Honever, t h e
of t r a d e
rJreek 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 t h e n o n - l i b e r a l i z e d s e c t o r
with EPU c o u n t r i e s was l a r g e r t h a n m i g h t b e t h o u g h t , s i n c e t h e l i b e r a l i z a t i o n
f i g u r e of 90 per cent was o f t e n anaverageof
a l l imports and the percentage
was c o n s i d e r a b l y l e s s i n t h e a g r i c u l t u r a l c a t e g o r i e s a p p l y i n g t o
Greek
paymentsarrangementswith
EPLT c o u n t r i e s
exports. It was a g r e e d t h a t d e t a i l e d
o f t e n were l e f t overfromtheperiodbefore
EPU and t h a t where they clashed
withnorrral EPU a r r a n g e m e n t s , t h e l a t t e r would p r e v a i l . The mission sugg e s t e d t h a t some of t h i s o b s o l e t e d e t a i l c o u l d u s e f u l l y
beelimi.nated.

It was s t a t e d by t h e Greek r e p r e s e n t a t i v e s t h a t l i s t s of e x p o r t s and

imports drawn up with Eastern bloc countries
were importantbecause of t h e
s p e c i f i c p r o d u c t i o n and t r a d e programs o f t h e s ec o u n t r i e s .
On theCreek
s i d e ,s u c h l i s t s rere m e r e l yi n d i c a t i v e .
These l i s t s were,nevertheless,
u s e f u l , as Greek t r a d e r s t h e n knew what t h e y might buy from t h e i r t r a d e
p e r t n e r s . The Greek r e p r e s e n t a t i v e s a l s o p o i n t e do u tt h a tb i l a t e r a l
an i m p o r t a n t o u t l e t f o r
agreements with the Soviet bloc countries provide
some of t h e i r e x p o r t p r o d u c t s f o r w h i c h
it would be d i f f i c u l t t o f i n d a
s u b s t i t u t em a r k e t .
k t the same t i m e ,a l t h o u g ht h e i rb a r g a i n i n gp o s i t i o n
i s weak, t h e y a r e able t o s e c u r e b a s i c i m p o r t s , e . g . p o i l
and aachinery,
which h e l p t o o f f s e t somewhat t h e s t r u c t u r a l l y - u n f a v o r a b l e t r a d e b a l a n c e
with Western Europe.
The staff missionobserved t h a t i n t h e c o u r s e
of A r t i c l e XIV consult z t i o n s , somemembers of the INF' had e x p r e s s e d t h e i r w i l l i n g n e s s t o
end
b i l a t e r a l paymentsagreementswithGreece.
The missioninquiredwhether
i n suchcasesGreece
would a l s o b e w i l l i n g t o t e r m i n a t e t h e s e a g r e e m e n t 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 , w h i l e i n p r i n c i p l e , t h e y
would l i k e
t o r e d u c e t h e i r r e l i a n c e on b i l a t e r a l i s m , i n some c a s e s t h e abandonment of
t h e b i l a t e r a l r e l a t i o n s h i p would r e s u l t i n a d v a n t a g e t o t h e i r c o m p e t i t o r s
and i n viewofthe
weak p o s i t i o n of t h e i r t r a d e b a l a n c e , Greececould nof,
r i s k stlch a development a t t h i s t i m e .

- 18 -

PART I

The s t a f f m i s s i o n commented on t h e l a r g e c r e d i t b a l a n c e
(around $17
m i l l i o n j i n theclearingaccountwithEgypt,
The Greek r e p r e s e n t z t i v e s
explainedthatthesurplus
was due p a r t l y t o abnormally large Greek
from Greeks
e x p o r t s t o E g y p t i n 1956, and p a r t l y t o c a p i t a l r e m i t t a n c e s
r e s i d i n g i n Egypt. The a u t h o r i t i e s were concerned a t t h e amount of t h e
c r e d i t b a l a n c e and were a c t i v e l y s e s k i n g ways t o reduce it.
The staff teamexpressed t h e view t h a t t h e e x i s t i n g r e s t r i c t i v e s y s t e m
couldbemateriallysimplllfied
and some o f the a d m i n i s t r a t i v e framewcrk
dismantled.Moreover,
a tL e a s t some of t h e b i l a t e r a l paymentsagreements
could be allowed to lapse withoutimposizg a s t r a i n on t h e Greek balance
of Payments, I n view of t h i s , t h e s t a f f team suggested t h e t t h e e x i s t i n g
agrsementsbere-examined.

..

- 19 IV.

PART I

Recomnendations

is s u b n < t t e d f o r c o n s i d e r a t i o n

The f o l l o w i n g d r a f t d e c i s i o n

by t h e

Executive Board :

1. The Government of Greecehasconsultedthe

Fection

XiV,

Fund u n d e rA r t i c l e

4, or" t h e Fund Agreement c o n c e r s i n g t h e f u r t h e r r e t e n t i o n

of i t s

t r a n s i t i o n a l a,-rmgexents.
2,

Dwing 1957, t h e g r o s s n a t i o n a l p o d u c t i n c r e a s e d

cent, primrily

by about 9 p e r

on account of a r e c o r d h a r v e s t , b u t i n d u s t r i a l p r o d u c t i o n

also r o s es u b s t a n t i a l l y .P r l c e s

a d wagesremained

stable.

The Government s

ordinary and investment expenditL-es were covered fron non-inflationzry

sources.

A s a r e s u l t o f h c r e a e e dc o n f i d e n c ei n% h en a t i o n a lc u r r e n c y

i n r e s p o n s e t o an adjustment i n t h e i n t e r e s t

supply, nevertheless,

rates p a i d on d e p o s i t s , a

time and saringsdepositswithbanks.

marked i n c r e a s e o c c u r r e d i n

and

expanded by 17 ?er cent, primarily because

The sioney

of c e n t r a l

bank f l n a q c i n g o f l a r g e - s c a l e g o v e r n m e n t a l p r i c e s u p p o r t o p e r a t i o n s ,

useofce:ltralSankfunds

f o r t h e f i n a n c i n g of the lending program

and t h e

of t h e

k g r i c u l t u r d Eank, which is e x t e n d i n g c u l t i v a t i o n andinvestmentloans

farmers a t a p r e f e r e n t i a lr a t e
i n t e r n a l demand broughtabout
exports have

of i n t e r e s t .

improve,however,

The r e s u l t i n gi n c r e a s ei n

a considerable rise i n inports.Although

also i n c r e a s e d , t h e r e

balance o f t r a d e .

to

was a s u b s t a n t i a l d e t e r i o r a t i o n i n t h e

The balaace of payments on currentaccountcontinuedto

primarily because

of thecontinuedsharpriseinreceipts

from t o m i s m andernigrantandseamen'sremittances.Capitalinflow,especially
the utilization

of U.S.

foreign exchange holdings

a i d , was s m a l l e r i n 1957 t h a n i n 1956 and t h e g o l d

of t h e Bank of Greece declined

i n 1957.

and

- 20 3.

TheFund

PAIT I

n o t e sw i t hs a t i s f a c t i o nt h e

measurestaken

and fiscal sphere toward strengthening confidence

restoringtheeffectivefunctioning
lenderofsavings.

as c o l l e c t o r and

a furtherdevelopment

econonywhilemainteininginterr,alpricestability

would, however,be

and e x t e r n a l b a l a n c e ,

a f u r t h e rr e v i e w

i n t e r e s t rate s t r u c t u r e and thegovernment-sponsoredprice

would be d e s i r a b l e .T h i s

on thebalance

it

of t h e

s q p o r t scheme

would also be h e l p f u l tokrard s t r e c g t h e n i n gG r e e c e ' s

ability to gain foreign markets for

TheFund

of t h e

e s s e n t i a l f o r a g r i c u l t u r e t o cover i t s Zinancialneeds

fromnon-inrfLationarysources.Forthatpurpose,

4.

thecreclit

i n t h e d r a c - h a and

of thebankingsystem

Iz o r d e r t o f a c i l i t a t e

ip

its growing a g r i c u l t u r a l p r o d u c t i o n .

n o t e st h eG o v e r n x e n t ' sd e t e r n i n a t i o nt o

meet t h e p r e s s u r e

of payxentsthroughinternalcorrectivemeasures.

TheFund

Selieves, hmever, that further progress In simplifying the restrictive

system and i n r e d u c i n g r e l i a n c e

on b i l a t e r a l i s m is f e a s i b l e and mges Greece

t o review i t s r e s t r i c t i v e s y s t e m with t h e s e p u r p o s e s i n

5.

Inconcludingthe

view.

1957 corn-dtations, t h e Fund hasnoothercornLents

t o nzke on t h e t r a n s i t i o n a l a r r a n g e m e n t s n a i n t a i n e d

byGreece.

Backmound

Materialf o r 3 7 Cocsultations

Prepared by theEuropeanDepartment
and t h e
Exchange R e s t r i c t i o n s Depertment
June 12, 1958
Contents

Page
-

Sumnary

I,

E c o n m i c Developrcents

1.

2.

3.

4.
5.
6.

Production and n a t i o n a l income

a.
. k g r i c u l t u r apl r o d u c t i o n
and f i s h e r i e s
b.
I n d u s t r iparlo d u c t i o n
c.
Construction
d.
Import
surplus
e.
Use of resources
f
Inve st n e n t
hblic finance
2.
Governnent
budget
b.
Government support
operations
c.
The semi-governmental
organizctions
Ivioney and banking
a,
Me ans of payment
b.
C o m e r c i a l banks
c.
The k g r i c u l t u ra 1 Bank
6.
C r e d ipt o l i c y
and i n t e r e s tr a t e s
e.
I n t e r ersat t e s
f.
Capital
market
P r i c e s and wzges
Bal znce of payments
Foreign exchange reserves

11. Developments i nt h eR e s t r i c t i v eS y s t e m
1.
2.

3.

4.
5.
6.
7.

&change r a tset r u c t u r e
Import and i n p o r t payments
I n v iisb l e s
Exports and e x p o r t payments
Eonresident
accounts
C a p i ttsr1a n s a c t i o n s
B i l e t e raarlr a n g e n e n t s

Appendix I.

B i l a t e r a l Trade
md
Payments
Agreements
of Greece

4
5
6

6
7
7

9
9
11
13

14
Is,
15
16
18
19
21
22
23
28

30
30
30
33
33
33

34
34

37

-1-

PART I1

Summary

In 1957 Greece continued t o make progress toward financial stability.

Prices and wages showed l i t t l e or no Increase, and confidence
in the currency ar,d i n t h e bankingsystem was strengthened. The ? r i c e of gold
1958.
sovez-eips remained below t h e 1956 l e v e l s and has declined further in
Some irlcrease i n i n t e r n a l demand was s a t i s f i e d b y l a r g e r i m p o r t s , w i t h
a
consequent l o s s of foreign reserves.
Gross natiorzal income a t c o n s t a n t p r i c e s i n c r e a s e d i n 1957 by about
compared t o anincrease of 5.5 p e r c e n t i n
1956. The rise
i n n a t i o r , a l income was mainly due t o an increase i n a g r i c u l t u r a l p r o d u c t i o n ,

9.5 percerlt,

theresultof
a good harvest in almost
a l l crops. Crop productionincreased
by about 16 ;3er c e n t , y i e l d s b e i n g p a r t i c u l a r l y
high I n trheat and tobacco.
Livestock, forestry, an6 fisheries did not
show s o much progress and the
value of production
i n t h e a g r i c u l t u r a l s e c t o r as a whole increased by
incomes of farmersstimulateddomestic
approxinately 13 pel- cent.Increased
i n d u s t r y ,p a r t i c u l a r l y consumer goods such as t e x t i l e s .P r o d u c t i o ni n
industry, which had har6I-y advanced i n 1956, increased by about 8 per cent
i n 1957. Trade,publicutilities,andconstruction,
which hadcontributed
most t o t h e i n c r e a s e i n p r o d u c t i o n i n 1956, were l e s s i m p o r t a n t i n 1957.
I n 1357 a smaller share of resources vas absor3ed by consuuption and by
publicinvestment,and
a l a r g e r s h a r e by privateinvestment.
More thanhalf
of t h e l a t t e r was i n r e s i d e n t t a l c o n s t r u c t i o n .
Although t h e n e t e f f e c t
of a c t i v i t i e s of the public sector
was probably
expansionary,thegwernmentbudget
i t s e l f was balanced.Actualrevenue
exceededestimates,andalthoughexpenditure
was also increased, the ordinax-y
budget showed a small surplus which helped to finance the investment budget.
of
The r e s t of invest2ent expenditure vas covered out of counterpart funds
U.S. a i d and loans from institutional savings placed
with t h e Bank of Greece.
Investment represented aboct 13 per cent of t o t a l budget expenditures i n
1957. A bigger public investment effort
i s planned for 1958, w i t h emphasis
on agriculture and the promotion
of t o u r i s m , but it i s expected that higher
investment outlays w i l l be offset by increased revenue and lower expenditure
on current account.
Outside the budget proper,
the government i n 1957 continued and expanded
i t s o p e r a t i o n si ns u p p o r t
of a g r i c u l t u r e . Large q u a n t i t i e s ofdomestic
wheat were bought, financed f r o m Bank of Greece credit, and stocks increased
considerablyovertheyear.Currant(sandsultanas,and
some tobacco,were
also pmchased.
The a g r i c u l t u r a l p o p u l a t i o n w a s a l s o a s s i s t e d b y cheap c r e d i t advanced
by t h e A g r i c u l t u r a l Bank from Bank of Greece funds. Short-te,mloansfrom
t h e A g r i c u l t u r a l Bank s e r v e d t o s u p p o r t farmers during the growing p e r i o d
andwhilenegotiating
t o s e l l their crops. Loans t o producers of tobacco
f o r t h e l a t t e r purpose increased consi6erably
i n 1957.
Agricultural support operations financed
by t h e i s s u e of currency served
t o i n c r e a s e t h e means ofpayment,which
rose by about 17 p e r c e n t i n 1957.
Apartfrom t h e a g r i c u l t u r a l s e c t o r , bank c r e d i t was not an expansionary factor.

- 2 -

PART I1

AC\ra11ces by cormercial banks increased by about

45 p e r c e n t i n 1957, b u t
cashbalances,an&
savi:zgs andtimedeposltsinxeasedeven
more. This
i n c r e a s e 6 l i q u i d i t y v a s f e l t by t h e morletary a u - t h o r i t i e s t o h o l d a p o t e n t i a l
inflationary danger for the future.
The i n c r e a s e of d e p o s i t s g r e a t l y l e s s e n e d t h e
dependenceof tine conm e r c i a l b a r k s on Bank of Gree-e financing, and the
B a z k moved i n t h e d i r e c ' deposits
t i o n ofstreng5heningreserverequirements.Coumezcialbanks
with the SankofGreece
increased during 1957 from 3 p e r c e n t t o 10 per cent
of t o t a l a s s e t s .
A largepartoftheincrease
was i n blockedfundsawaiting
e m p l o p e n t i n medium- and long-term loans, i n accordance with a nev regulat i o n bywhich a c e r t a i n p e r c e n t a g e ofbank d e p o s i t s h a d t o beemployed i n
o r e l s e h e l d a t t h e Bank ofGreece.
long-termindustrlalinvestment,
I n t e r e s t r a t e s on d e p o s l t s were reduced a t t h e endof 1957. The r a t e f o r
s i g h t d e p o s i t s i s now 5 per cent, for t i m e d s p o s i t s 9 p e r c e n t , a n d f o r
savingsdeposits 6-8 p s r c e n t , a c c o r Z i n g t o s i z e .
Loan rates were uncha:lged.
is
?%le m a x i m m r a t e f o r c o r m e r c i a l bank l o a n s t o manvfacturirg acd trade
1 2 p e rc e n t( i n c l u d i n g
ban!! charges). Loans t o a g r i c u l t u r e a r e made a t
p r e f e r e n t i a l r e t e s r a n g l n g from 5- %1/2 p e r c e n t .
T;;holesale p r i c e s d e c l i n e d i n 1-95",r e t a i l p r i c e s remained stable, and
t h e c o s t of l i v i n gr o s eb ya b o u t
2-5 p e r c e n t . P r i c e i n z c e s
have declined
i n 1958. ?,/ageskavebeen
stable.
The Greek balance of payients
was, o n t h e whole, s a t i s f a c t o r y I n 1957.
The trade d e f i c i t i n c r e a s e d from $222 m i l l i o n i n 1956 t o $298 m i l l i o n i n
1957, o r by $16 n i l l i o n . Although exports increased by
$29 m i l l i o n ( f r o 3
$194 m i i l i o n t o $223 n i l l i o n ) , limports i n c r e a s e d by $45 rnlllion (from $476
m i l l i o n t o $521 T i i l l i o n ) . " h e i n c r e a s e i n e x p o r t s
was d m c s t e n t i r e l y due
t o a n i n c r e a s e o f $23 m i l l i o n i n r e c e i p t s from tobacco, and
$10 I s i l l i o n
a carry-over from the previous exporting seasoc.
of t h i s was t h e r e s u l t o f
Cotton expol'ts, which had been substantial
i n 1956, f e l l off i n 1957 as
a r e s u l t of m a r k e t i n g d i f f i c u l t i e s . T h e r e
was anencouraging r i s e i n exp o r t s of f r e s h f r u i t a n d v e g e t a b l e s t o
WesternEurope.
The r i s e i n i m p o r t s
was on p r i v a t e a c c o u n t ; government -5nports f e l l o f f because gcod harvests
a t hone reauced the nee& t o i n p o r t v h e z t a n d a n i a a l f e e d i n g s t u f f s . P r i v a k e
oI" t n e i n d u s t r i a l a n d c o n n e r c i a l
inports reflected the higher incoEes
p o p u l a t i o nr e s u l t i n gf r o mi n c r e a s e dp u r c h a s i n g
power of farmers. The i n crease in Lnports consisted mostly
of n a t e r i a l s for i n d u s t r i a l p r o d u c t i o n
a;l& consuinergoo&.
I n p o r t sh a v er i s e n
a t a f a i r l y r a p i d r a t e i n 1958. The Gresk
a u t h o r i t i e s are w o r r l e d a b o u t t h e e f f e c t
on f o r e i g n r e s e r v e s of a f u r t h e r
s5wp i n c r e a s e i n i m p o r t s i n lS58.
The l a r g e r t r a d e 6 e f i : i t
of 1957 was more t h a n o f f s e t b y i n c r e a s e d
r e c e i p t s from services and donations,
wiiicn t o t a l l e d $208 m i l l i o n compared
t o $170 nillion i n 1556, a n d t h e d e f l c i t on t o t a l c u r r e n t a c c o u n t was r e ducedby $38 n i l l i o n ( f r o m $112 m i l l i o n t o $90 m i l l i o n ) . The mostimportant
($7'1m i l l i o n compared t o $61
i n v i s i b l e i t e m s wereemigrants'remittances
m i l l i o n i n 1956) and seamen's remittances
($65 m i l l i o n compared t o $48 m i l l i o n i n 1956).

I.

1. P r o d x t i o na n dn a t i o n a l
"

Econonic De-Telopments
income

The g r o s s n a t i o n a l income of G r e e c e i n c r e a s e d I n r e a l t e r m s i n
1957
byabou-t 9.5 percent,
compared t o anincrease of 5 p e r c e n t i n
19j6. A
l a r g e p a r t of t h e i n c r e a s e i n 1957 was c o n t r i b u t e d b y a g r i c u l t u r e a n d i n d u s t r y ( t o g e t h e r 66 p e r c e n t ) compared to only 26 p e r c e n t i n
1956. Trade,
t3
public utilities acd construction,
which had contributed substantially
t h e i n c r e a s e i n n a t i o c a l incorne i n l356,were Lrxch l e s s h p o r t a n t in 1957
(Table 1).
TaSle 1. GrossRationalIncone
( I n millions of dzac:mas a t constant
"

1955

"

Percentage
Percentage
Share
195Tq

A g r i c l r l t m e ,f o r e s t r y ,
18,938
33.5
34.5
fishing
X
i ni.ng
718
1.3
Industry
10 746 11,600
19.1
uPt ui lbi lt i ce s
1 020
1.8
bZonstruction
J I137
3.9
I'rensport and
commmications
3 J 323 3,349 5.9
Comerce
11.8 7,236 11.7 6,578
Banking
1,233
2.2
Rents
3 246
5.8
Public adTinistration
and clef ense
3,964
6.9
3,867
i3ealt.h and e d x a t i o n
services
1,331.
1,358
2.4
servicesOther
1,764
3.1. 2.9
J

Gross d o x e s t i c p r o d x t
Netincome frola abrcaa

54,981

Gross national

56,259

Source:

income

Bank ofGreece.

Provisional.

1,278

1954 p r i c e s )

97-7

2.3
-

100.0

21,370
862
1 122
J

3T2

1,344
3 462
J

1,783
97.2
59,8&2
1,723
61,555

Figures supplied to the

IvIission.

Change
c e n( tp)e r

1-955/56
1955/57

Share

1.4

1.8

41

5.5

1s.9

3.9

15

12.8

20.0

7.9

10.0

7.9

1.4

10.0

5.5

10

6.0

6.5

2.5

2.0

2.2

2.2
2.8
100.0

34.8

9-0

1.0
-

9.5

4
49
-

9.0

-4a.

PABT I1

A g r i c u - l t w a lp r o & v c l i o na n df i s h e r i e s

The value of. production

i n t h e whole a g r i c u l t u r a l s e c t o r i n c r e a s s d b y
abouf, 13 p e r c e n t i n 1957. Crop production ,increased by 15 per cent comparedto a negligibleincreasein
1955. F i s h e r i e s a l s o showed some i n c r e a s e .
There was l i t t l e or no advance i n l i v e s t o c k a n d f o r e s t r y p r o d u c t s .
The
is
estimated. value of total agricultural production by principal sector
shovn i n Table 2.
Table 2. Valueof
A g r i c u l t w a lP r o d u c t i o n
. " ( "I n l s i l l i o n s of drachmas a t 1954 p r i c e s )

1956

2.6

19579

15.2

Agriculture
Livestock
Forestry
Fishing
Total

Change

14
-

17.6
2.6

*7

.'

-7

.4

.4

18.9

"

13

21.4

S o > . ~ c e : Eanl; of Greeceestimates.

Estimated.
A b i g f a c t o r i n t h e i n c r e a s e of production w s s t h e good \heat harvest,,
mainly as a r e s u l t of favorableweat.herconditions.
Toe tobaccocrop vas
l a r g e - - b t h o u s a n d t . o n s i n t h e 1957f58 crop year as compared t o -about 63
thousand 'cons i n t h e previcus cropyea-r--though o f i n f e r i o rq u a l i t y .C o t t o n ,
sorrie v e g e t a b l e s a n d f r u i t
shoT,red s u b s t a n t i a l i n c r e a s e s .
As canbeseen
fi*om Ta5le 3 , the volune of cropproCxctiolz i n Greece In 1957 was 70 Fer
c e n tg r e a t e rt n a nb e f o r et h e
vzr. ?"ne percentegeincrease was p a r t i c u l a r l y
fruits andvegetables.
highincotton,rice,tobacco,citrus

Table 3.

\The a t
Idaize
Tobacco
Cottoll
Olive o i l
Olives
Citrus f r u i t s
Illust

Grapes
Potatoes
Tomatoes
Currants

1956, 1957

AgriculturalE'rodcction,

1938

1953

1955

217

3c9

238

46

45
103
25;
62

463
96
158
x 9

150

61

1957Y

255

1cg

82

154

94
158
55

181

167

L41c

28

53

176

223

2c9

445

433
119
454

77

91

420

120

345

Per
cent

435

115

505
445
7s

$9

Source:Ministry
of A g r i c u l t c r e .F i g u r e ss u p p l i e dt ot h e
Xission by t h e Bards of Greece.
~-J-Prel-hinary.
~

~~

~~~~

Cl;ange

+11
+28

+17
+16
-46
+7

"1
- 3
+11
+21

- 5 -

PART I1

While a l a r g e p k t of t h e i n c r e a s e i n c r o p p r o d u c t i o n
vas due t o
favorable weather, land inprovement (irrigation, drainage, etc.
) andthe
i n c r e a s e d use of f e r t i l i z e r s was a l s o a c o n t r i b u t i n g f a c t o r a n d may be
expectedtoraiseproductionevennore
is future r e a r s . Some p r o g r e s s
vas nade i n 1957 i n more l a b o r i n t e n s i v e p r o d u c t i o n s u c h
as l i v e s t o c k
and Cairyi-ng and i n c r o p s w i t h a more promising export future such as
freshfruitan&vegetables(Table
4 ) . There was a l s o p r o g r e s s made i n
was made
p r o c e s s i n g of f r u i t and vegetables and an encouraging beginning
i n $he f r e e z i n g of d e e p s e a f i s h for domesticconsumption.
Table 4. D i v e r s i f i c a t i o no f Crops
(Area i n t h o u s a n d h e c t a r e s )

Cereals
Citrus
Other f r u i t trees
Potatoes and vegetables
Foragecrops
Seed cotton
Suzflower
Source:
b.

1955 1956
1,804 1,776 1,733 1,749
20
18
18
19

FAO: ReportonGreece,

Industrial

1-353

80

1954

90

1%

160

89

109

100

162

141

145

go

143
184

137

145
178
3

1957.

prociuction

Tile v a l u e of maneactwring production increased from about

$10.7
I l l i l l i o n i n 1956 t o $11.6 n i l l i o n i n 1957, or by about 8 p e r c e n t a t 1954
F r i c e s .T n i s
was much b e t t e r t h a n i n 1956, when rnanufacturi-rg production
ma& v e r y l i t t l e progress. he i n c r e a s e i n p r o c i u c t i o n i n
1957 was nost
narked i n t h e second half of the year, and
t h e main r e a s o n f o r it was t h e
r i s e i n a g r i c u l t u r a l incomes. There vas a l s o some improvement i n e f f i c i e n c y
dv.e t o re-equiFment.
The brancnes of i n d u s t r y showing a o s t i n c r e a s e were
t h o s e producing consumergoods,such
as t e x t i l e s , c h e m i c a l s ( i n c l u d i n g
f e r t i l i z e r sa n dg l a s s w a r e ) ,p a p e r ,a n de l e c t r i c a la p p l i a n c e s .
All these
branches had s h s m only small i n c r e a s e s , or even d e c l i n e s , i n 1956. The
lninlng and p r o c e s s l n g of m i n e r a l s a l s o went ahead i n 1957, and the productTon of e l e c t r i c i t y c o n t i n u e d t o i n c r e a s e s a t i s f a c t o r i l y w-ith t h e implementamaterials, on t h e o t h e r hand,
t i o n of the e l e c t r i f i c a t i o n p l a n . B u i l d i n g
began t o show t h e e f f e c t s of a slowdown i n b u i l d i n g a c t i v i t y . P r o d u c t i o n
f e l l o f f i n December. The d e c l i n e i n t e x t i l e
i n soaebranchesofindustry
production at t h a t time was a t t r i b u t e d t o f o r e i g n c o m g e t i t i o n .
IncEces of i n d u s t r i a l p r o d u c t i o n b y p r i n c i p a l b r a n c h e s f r o m

1955 t o

1957, as compiled.by t h e F e d e r a t i o n of Greek I n d u s t r i e s , a r e shown i n

n
la51e 5.

PAXT I1

-6Table

5.

Xachlnerjr
Building materials
Textiles
Food
Chemicals
Clothing
E l e cat pr ipclai al n c e s
!.'ising ( o r e s )

I n d i c e so fI n d u s t r i a lP r o d u c t i o n
(1939 = 100)

285

286

1-38 137
U60
1-75
io

r /

250

85

191- 198
315 270
317
153
16k
165
155
182
50 65 7'1
173
255
120
165

225

205

162

1-57

166

181

330
155

233

152

153

65
325
155
-

S o w c e :F e d e r a t i o no f
Greek Ind-cstries. Figures givzn 4n Xocthly
S t a t i s t i c a l B u l l e t i n of Bank of Greece.
%f 1Jiontk;ly average.
~

c.

Construction

Construction, pz--ticularly residential constrxtion in the Athens area,

h a sb e e ne x t e n s i v ei nG r e e c ei nr e c e z t
years. In 1957, nowever, t h e bocrn
slov?d signs of subsiding, and applications
for l i c e n s e s t o b u i l d d e c l i n e d
i a t h e l a t t e r p m t of the ye=.
6. 1 q o r "ssu r p l u s

.The i n p o r t surplus ( t h e e x c e s s of paynents f o r goods and s e r v i c e s o v e r

r e c e i p t s ) i n 1-957vas l a r g e r t h a n i n 1956, although i t s share in t o t a l
reso-jrces a v a i l a b l e t o t h e econeny vas the sane as i n 1956 (Ebout 7 p e r c e n t )
LncreaseS!t'r,=reforebyaboutthe
sme
(Tzble 5). T o t a l a v a i l a b l e r e s o u r r s s
m o u n t (9.5 pe- c e n t ) as GTP.
I n 1.956 a r e l a t i v e l y g r e a t e r g-owth i n t h e
s i z e of t n e c u r r e n t f o r e i g n d s f i z i t c a u s e d t o t a l r e s o w c e s a v a i l a b l e t o
increase rather faster than tne
gross n a t i o n a l p r o & d c t .

S o w c e : Bark of Greece.FiguressuppliedtotneMission.
in parenthesis represent percentage
change a t c o n s t a n t p r i c e s .
Provisional e t a .
~~

~~

-7 e.

PART I1

Use of resources

"
"

Tkere was not much change i n 1957 i n t h e r e l a t i v e u s e of resources by

d i f f e r e n t s e c t o r s of t h e econony. Some i l l u s t r a t i v e f i g u r e s a r e g i v e n i n
of t o t a l consumption i n a v a i l a b l e
Table 7. It w i l l be see2 t h a t t h e s h a r e
r e s o u r c e s d.ecli:iedfrom 1955 t o 1957. I n 1956 t h i s was Cue t o a d e c l i n e i n
t h e s h a r e of p r i v a t e consvmption,whilegovernmentconsuxptionmaintained
i t s r e l a t i v ei m p o r t a n c e .
It i s p o s s i b l e t h a t t h e
same i s t r u e of 1957, b u t
the breakdownbetween goverment and private consumption
i s not yet available.
I n T a b l e s 6 and 7, -pereelitage changes between 1955 and 1956 are given at,
c o n s t a i l tp r i c e s as well as at currer;tprices.
The c o n s t a n t p r i c e f i g u r e
is
more conparable to t h e f i g u r e s g i v e n ofpercentagechangeSetween
1956 and
1957, because of t h e q u i t e sn;all pyice r i s e i n 1957.

investment
91763
Total gross f i x e d
in.mstment
9J Oo4
G r o s sf i x e d :p r i vate
6,434
Grossfixed: public
2,570
Xange
s t oi cnk s

759

14

12,170

16

14,720

17

25

13

10,960

14

12,220

14

22 (14)

8,147

10

9,250

11

27

4
i

2,813

1,210

4
I

2J970
2,500

3
2

(16)

(16)

20

11

1-3

9 ( 8)
5
59 (44) 167

3ov.rce: Bark ofGreece.

F i g u e ss u p p l i e dt ot h eM i s s i o n .
1
~
!P r o v i s i o n a l .
Figzes in pareathesis represent percentage
change a t c o n s t a n t p r i c e s .

f.

Investment

According t o t h e figures i n Table 7, gross f l x e d investment increased by

about 11 per c e n t i n 1957, com2ared t o 14 p e r cent i n 1956, maintaining i t s
shareinavailableresources
a t arourd 14 p e r c e n t . P r i v a t e f l x e d i n v e s t m e n t ,
however, s e e m t o have r i s e n much more rapiCLy than pxbliz fixed investment,
as l a r g e as t h e l a t t e r .
More than half of
and i n 1957 was a b o u t t h r e e t i m e s
30 p e r
p r i v a t e f i x e d i n v e s t m e n t was i n r e s i d e n t i a l c o n s t r u c t i o n , a n d n e a r l y
of t r a n s f e r s of
cent of the reslainder was i n s h i p p i n g , c o n s i s t i n g l a r g e l y
Greek-owned vessels t o t h e Greek r e g i s t e r . The l a r g e s t i t e m s of p u b l i c i n vestmect vere i n t h e r e p a i r of earthquake camage, highway construction and
agriculture (including irrigation and land inprovement projects),

E l e c t r i c i t y schemeswere a l s o i m p o r t a n t . . T h e d i s t r i b u t i o n
of f i x e d i n v e s t mentaccording t o t y p e s of a s s e t , o r s e c t o r s of t h e economy, i s i n d i c a t e d
i n Table 8.
Table 8.

Gross C a p i t a lI n v e s t m e n ti n

1957

(Provisional)
( E i l l - i o n s of drackm.as a t c u r r e n t p r i c e s )
Per cent
Public

Sectors
A g r i c u l t u r e ,l i v e s t o c k ,
f o r e s t r y ,f i s h i n g
Irrigation and land inprovirg:
M i n i s t r y of P u b l i c Works
N i n i s t r y of A g r i c u l t u r e
Mining
Electricity
Industry
Railvays
Eoads,bridges
Transsort (Greek Electrical
Railways Electrical Transport
Civil Aviation
Vehicles
Shippir,g
Earbors
Telecommuntcations
Tourism
Housing
Waterdrainage
Education
Earthquake rehabilitation
Iiealtk?, s o c i a l welfcre
PEblic a d m i n i s t r a t i o n a n d
miscellaneous
IO b a l

154

7.0

220

1.8

51.
7
418

210

90

Co.)

0.5

0.3
4.9

12.3
0.7

462

3.6

0.6

5.
28
45
93
e8
190
164
55
495

55

200

2,970

Source:Ministry
of C o o r d i n a t i o n .F i g u r e ss u p p l i e dt ot . h eM i s s i o n
Eank of Greece.

5.1

9.8

0.4
0.8
0.3

43.3

1.7
0.6

4.1
0.5

2.0

100.0
by t h e

There vas a s u b s t a n t i a l gi-O-klTth of i n v e n t o r i e s d u r i n g 1957, mostly

accouxted f o r by s t o c k s of wheat and other agricultural proc?ucts purchased
and held by the government
j.n various price support operations. There
vas also
soneaccumulation of tobacco.
C a p i t a l o u t l a y s of t h e p u b l i c s e c t . o r c o n s i s t e d p a r t l y
of p r o j e c t s u n d e r taken directly by the goxrerment, mostly throilgh the budget, and partly
of
p r o j e c t s u n d e r t a k e n by semi-governnental organizations, such
ES t h e P u b l i c
Pover Corporation (the 5iggest single investor in Greece), the
Telecommunications Organization, and the Econonic Financing
DevelopmentAgency. D i r e c t

PART 11

g o v e r m e n t i n v e s t n e n t amounted i n 1957 t o around 2,230 r n i l l i o 2 drachmas i f

expendit-mes Ere included of 300 m i l l i o n &echrr,ason t h e government o i l
refinery.
These expenditures were coveL-ed b y f o r e i g n c r e d i t s , p a r t l y i n t h e
f o r n of importedcaFitalequipnen5.Totalpu3licinvestment,includingthe
indeperidezt public bodies and enterp:-ises,
may have approsched 3,000 m i l l i o n
Crachas

Public capital investnent in agriculture tbzough the iZgricultural

Bank
i s expected t o m o u n t t o a b o u t 700 m?lllion drachm,as i n 1958 compared t o 500
E i l l i o n d r a c h a s i n 1957. Of t h i s 700 m i l l i o n cbachrcas, 230 r r i l l i o n dracbmas
vi11 be spent on irrigation an3 land impotrement,
and 1OC c l i l l l o n drachmas
each on the purchase of livestock and
on a g r i c u l t x r a l i n d u s t r y .
2.

P d o l i fci n a n c e
n

i h e p b l i c s e c t o r i n Gyeeze consis-ks of t h e governmentbudget, t h e v a r i o u s

s q p o r t o p r a t i o n s unGer-hken by t h e government o u t s i d e t h e butiget i n f m o r
ofcertaincomoditiesandsectors
of t h e econorriy, a n d t h e f i n a n c i a l o 2 e r a t i o n s
of thesemi-pu5licorganizations(seeabove).
me t o t a l e f f e c t on t h e econony
of t h e p a b l i c s e c t o r
could bemeasured as a csmbination of a l l t h e s e a c t i v i t i e s .
Ecwever, systematic information i s a - m i l a b l e o n l y o n t h e governmentbudget.
8.

Government budget

I n 1957 t h e government budget was n o t a n i n f l a t i o n a r y f a c t o r i n t h e

ecocoay. Tile d e f i c i t i n t h e conbinzd ordinaryan6investmentbudgets
was
coxrere< l r o m counterpart fur,& of U.S. a i d d e 2 o s i t e d d u r i n g t h e f i s c a l y e a r ,
End by borroving from t h e l o n g - t e m L e p o s i t s of p u b l i c e n t i t i e s ( s o c l a l
secvrity funds, etc.)
at tine Bank ofGreece.

Prelimina;.y figares f o r t h e results of t h e

estimates f o r 2953, are shown i n Table 9.

1-95" budget, together with

Revenue i n 1957 was consicerablyhigherthanestimated.

The i n c r e a s e
apFarently came mostly from indirect taxes, including customs duties
from
higheriaports.Directtzcesaccouinte5forsomethingunder
20 p e r c e n t of
current ordinsyy revenue from
domestPc s o u r c e s a n d i n d i r e c t
taxes f o r around
70 percer-t.
Most o f t h e 2,000 m i l l i o n d r a c h a s o r so, b y v k i c h r e v e w e s
of the or2inary budget
exceer5eC o r i g i n a l e s t i z a t e s , was u s e d f o r c u r r e n t
expenditure cf t h e government.Icvestnentexpenditmeswerenothighez-than
originally budgetea.
In t h e 1.958 e s t i m a t e s , t o t a l r e v e n u e of t h e o r d i n a r y b u d g e t i s expected
t o besoxe 500 m i l l i o n b a c l m a s h i g h e r t h a n a c t u a l r e v e n c e s i n
1957. The
i n c r e a s e i s expected t o cone m a i n l y f r o 2 i n d i r e c t t a x a t i o n . P r o c e e d s o f d i r e c t
t a x a t i o n are e x p e c t e d t o b e aboct t h e saTe as i n 1957, minor- r e d u c t i o n s i n
personal allowances and other benefits, vhich
came i n t o e f f e c t i n J a n u a r y 1958,
beingoffsetbygreaterefficiencyincollection.Progress
has alreadybeen
i s expected i n 1958.
made i n p r e v e n t i n g t a x e v a s i o n , a n d f u r t h e r p r o g r e s s
C u r e n t e x p e n d i t u r e i s planned t o be less t h a n i n 1957 (perhaps by 300 m i l l i o r ,
a tiecline i n n t l i t a r y o u t l a y s .
&actmas),onaccountof

10 -

PART I1

( I n m l l l i o n s of drac-has, rounded)

1955/56

3J'

1958

1957
(Preliminary
Results )

A. Ordinary Budget
Direct taxes

revenue

2,340

Indjrect "
Other
Revenue f ri socnapl r e v i o u s
ye a?.? S

NATO I n f r a s t r u c t u r e
T o t a l Revenue
Expenditure
Balance

2,955

11,670

8,900

1,355

1,145

655
755

600

17,390
18,070
-680

405

13, 390
139 215

+I75

)
)

1
1

(Estimates)

13,540

630

14,170
12 9.50
1,210
J

B. Investment Budget

Revenue fron previous investme n t

Other
U.S. a i d
from Loam
legal entities
2,060
Total
Expenditure
Bslaace
balance
Final
(A i B)
"

250

1,695
325
2,280

1,875
405

-275

165
315g
1,250
330

2,235
-175

149

900
500
1,540
2,750
-1,210

Source: Staff calculations based

on figures s u p p l i e d t o +,he Missionby
t h e Bank of Greece.
1/ July 1955-December 1956.
Including 305 million drachnas of foreign
loans f o r c o n s t r u c t i o n of oil
refinery.
A f i g x e of 2,750 million drachmas has been mentioned for 1958 govermsnt
investment through the budget. This
would mount t o about 18 per cent of
t o t a l e x p e n d i t u r e , compared t o o n l y 1 3 p e r c e z t i n 1957. I n p a s t y e a r s ,
of estimates.
the govermentls investment expenditwe has sometines fallen short
Approximate figures for the investment budget estimates
for 1958 as conpared
t o results in 1957 are given i n Table 10.

- 11 Table 10.

GovermentInv2stmentBudget

("
I n millions
of
-

PART I1

1-957 1/

dracbxnas
-)

(Provisional
Be sult s )

735

Agricultme
Industry(including
and mining
electricity)
Transport
Health,labor,e6u-cation,
and
Ot.her

1,140

405
7659

280

59 5
50

Tourlsm

s e r v i c e so t h e r

1.958
Increase
(Estimates) ( I np e rc e n t )

1
-

235
35

55
45

28

150

200

279

15

2,750

TI3

20

Source:Stafffiguresbased
on B a r k of Greeceestiolatesand
o f f i c l a lannouncements
9' ~ x c ~ u d i n g o i l r e f i n e r y .
3' O f which $645 m i l l i o n drachmas i n r o a b , r a i l w a y s a n d a i r p o r t s .
T%e biggest percentage increase,
q a r t from tourism, a n d a l s o t h e
b i g g e s ta b s o l u t ei n c r e a s e ,
is inagriculture,witheqhasis
on i r r i g a t i o n
A s p e c i a l a l l o c a t i o n of 130 m i l l i o n Cirachmas has been
a n dd r a b a g e works.
m d e for t h e d e v e l o p s e n t o f f r e s h
fruit and vegetable production for export.
This includes marketing organization, ana the provision of specialized
eqdipinent f o r t h e s t o r a g e , p r o c e s s i n g a n d t r a n s p o r t
of p e r i s h a b l e c o m o d i t i e s .
ExpendLtuze i s t o b e i n c r e a s e d on h o t e l s a n d o t h e r t o u r i s t p r o j e c t s , i n of b a s i c highways.
clucling the construction
The investment budget i s expected t o be f i n a n c e d p a r t l y from a s u r p l u s
of the ordinary budget (about
1,200 m i l l i o n drachmas)and p a r t l y from revenue
f r o n previousinvestments
(140 milliondrachmas).
The remainder (1,400 m i l l i o z drachmas) i s t o be covered partly
f r o 3 the counterpart of current
U.S.
aid, azd p a r t l y from l o a n s f r o m l o n g - t e r m d e p o s i t s o f s o c i a l s e c u r i t y f u n d s ,
e t z . , a t t h e 2ank ofGreece.
I f , as now foreseen, U.S. a i d t o Greece
m o u n t s t o $35 m i l l i o n i n 1958, t h e ctraclma e q u i v a l e n t , a f t e r d e d u c t i o n
of
t o p r i v a t e firms, would
ex2enditures or' the U.S. K i s s i o n t o Greeceandloans
m o u n t t o a l i t t l e over &GO m i l l i o n drachmas.
b.

Govermentsumortomerations

Apx-tfrom

s u b s i ~ e sinclucled i n t h e budget,such as t h o s e f o r f e r t i l i z e r s
1957) a n d c o a s t a l s h i p p i n g (15 m i l l i o n drachmas),
the goverment cndertskes other suppart operations in comection with certain
consurner goo& (bo%h i q o r t s and domestic products) and with agricultural
eqort comoGities.
( 7 0 n i l l i o n 6rachmas i n

(1)Consmergoods.Theseoperationsarefinancedthroughanaccount
) held a t the Bank
of Greece f o r t h e K i n i s t r y ofFinance.Thisaccounthas
no d e b i t c e i l i n g .
('lCurrent account for t'ne f i n a n c i n g of consumergoods"

1-2

PmT I1

1;aport.s f i n a n c e d Prom t h e consumer a c c o m t have served t o augnent scarce

s u p p l i e sa n dt ok e e pp r f c e s
dowr,. kt d i f f e r e n t t i m e s , inports of s e e d o i l ,
aa& m6.p~t h i s procedxre.There
sugaz,riceandfrozenneathaveSeen
h w e also been some m i l i t a r y I t e m s f o r .the goverrunent' s o m use. The nost
k p o r t a n t d o n e s t l c c o m o d i t y i s %-heat.,whlcn i s bough", b yt h eg o v e r m e n t
ts keep
p r l c e s t o domesticproc'ucers.
Any l o s s t o t h e government i s
p a r t l y o f f s e t by r a i s i n g t h e p r i c e
of bread.
A good cropyearinvolves
a larger poteni;ial deficit since
it r e d u c e s t h e p o s s i b i l i t y of importing
cheaper foreign wheat.
~7.p

The t o t a l d e f i c i t onconslmerfinancingaccount
i n 1957 vas e s t i m a t e d
at 200 n i l l i o n b a c h a s , and t h i s d e f i c i t was coveredInthebudget.
That
i s , t h e s u r p l u s of approximately 175 m i l l i o n b a c k n a s n
I t h e ordj.nsry b d g e - t
was after tcrliing t h i s i t e m i n t o a c c o u n t .
The differencebetween tne t o t a l
expenditures and total receipts
of the consuaer firiarxing zccoayt
575s abo-:t
970 m i l l i o n &??arbmas,accorcling t o Be& of Greecefigures.
3ze co7St.itv%t
f i g w e and %e d s l i c i t I.a;c3ange 5;: stocks.
of the difference between this
Stocks .of d o m e s t i c w h e a t i n c r e a s e d s u b s t a n t i a l l y i n
1357, aid ir_c:-.>FLses
were a l s o r e g i s t e r e d b y o l i v e o i l alii sugar.
It i s n o t p o s s i b l e t o gauge a c c l x a t e l y t h e F r Z l a t i - o n a r ; e f f e c t
of t h e
governmentTssupport of cons-mer coo?s i n '957. An iIz->r-wex-nt was effec.'ued
i n t h a t , as d i s t i n c t frorr, otheryeLrs,
t h e act.28,: l o s s on o2:lrations was
covered i n t h e budget. On t h e o t h e r hand, Tn 1g;QtIere was a grea-t exp a n s i o ni ng o v e r m e n tp x c h a s e s
of danestic wincat
ccwbined vitc a f a l l
i n expenditure on im2orts. The i n c r e a s ei ns t o c k sr e p r e s e n t e da ni n c r e a s e
i n domesticincolnes
(except f o r p a p e a t s f~rixp,o:~ts)
C!-wirg t h e 2 e r i o d ,
which will o r l y b e o f f s e t as t h e s t o z k s arc g r a d x e l l y l i q u i d s t e i i .

port,andTntervenes
t o a varying e;:te;lt t o ;?urc?lase s i ~ p l - u s r : ~Cx-rants
.
ar- regularly
and sultanas, f o r i n s t a n c e , have a support price: and surpluses
p-mchased by t'ne government, o r by o r g a n i z a t i o n s ( s - x h as t h e Central Cu.rrm%
Office,andAgr-Tcult-&alCooperztlves),acting
011 i t s i n s t r u c t i o n s .
I n the
caseoftobacco,thegovernmentin6irectl-ysupportspricesandintervenes
where n e e e s s w y t 3 purchasesurpluses.Otheragricultuz-a1pro&uctsenjoy
varyiagdegrees oI' support.
Ilrlese
T(,

operaticns a r e u s u a l l y f i n a n c e d t h r o u g h t h e A g r i c u l t u r e 1Eank,
which o b t a i n s i t s Tesources a t present almost e n t 2 r e l y from issue funds o l
t h e Bank of Greece. The a c c i v l t i e s of t h e F " g r i c u l t - u a l B a l k a r e t i e a l t w i t h
i n S e c t i o n 3 , as a p u t of badcingorgenization.Briefly,the
Bank supports
loans t o p r o d u c e r s , p a r t i c u l a r l y
agricultural prices by extenuing collateral
of tobacco, t o p r o t e c t . them f r o x e x p l o i t a t i o n , am5 a l s o b y f i n a n c i n g
Cooperetive Associations for the p u r h a s e of a g r i c u l t u r a l p r o d u c t s . T h e s e
types of Loan, firzancedfrom Bank of Greece issue funds, increased by about
600 n i l l S o n & T a c h a s i n 1957.
E s t i a a t e d at

about 1,700 i n i l l i o n b a c h a s .

c.

The semi-governmental
"
"
"
-

13

PART I1

orgartzations

Of these organizations, probably

two, the Public Pover
Corporation
and the Telecomunications Organization,
me s e l f - s u p p o r t i n g on c u r r e n t
operations, and can e v e nf i n a n c ep a r t
of t h e i r own investment. The
Econonic IkvelopmentFinancing Agency handles revolving funds provided
from p a r t of t h e c o u z t e r p a r t of U.S. a i d . A t p r e s e n t , t h i s i s i t s only
s o u x e of c a p i t a l , a l t h o u g h l e g i s l a t i o n p a s s e d i n
1957 allows it t o
k~ol'row a t locg-term from the p u b l i c e n t i t i e s , a n d a l s o
t o issue securities
t o the public.

The i n f l a t i o n a r y i n f l u e n c e of semi-governmental orcanizations seems

t h e r e f o r e , a t p r e s e n t , t o 5e confir,ed t o t h e A g r i c u l t u r e 1 Bank,. T o t a l
c r e d i t f r o m t h e Bank of Greece t o t h e A g r i c u l t u r a l Bank i n c r e a s e d by
1,200 m i l l i o n drachmas i n 1957.

- 14 -

Fi-ZT I1

3.
Financial,stabi1it.y :.res n z i n t a i n e d i n 1?57. F r i c e s showed l i t t l e OF no
r i s e and confidence inthecurrencyincreased.Savings
and o t h e rd e p o s i t s
i n hoai-dinggoldsovereigm
withcomei-cialbanksincreasedrapidly.Interest
d e c l i n e d , and t h e i r p r i c e i n 1957 r e m a b e dw e l l belowtile l e v e l of 1956. In
t h es p r i n g of 1958, t h e r e wasa
furtherfall.
The Sank of Greece nox n&es
seasonalpurchases of goldsovereignsto
edd t o i t s r e s s r v e s .
a.

1ieans
of

naxnent

Foney supply, es defined by the Bank ofGreece,inmeasedrather

fast

i n 1957, f r o 3 9,240 m i l l i o n drachmas i n Deceriber 1956 t o lO,84.$. n i l l i o n

drachmas i n December 1957, o r by 17 percent (TEble 11). T h i s v a s n e e r l y

of g x w t h of t h e r e a l - R a t i o n a l p r c d u c t .
The s u b s t e n t i d ;.5 s e
twicetherate
i n l i q u i d i t y of t h e p h l i c appearsevannorepronounced
if t h e growth of..
smallsavingsclepcsits(withdrmable
on demand) i s takenintoconsiS.$>reticn.
The i n c r e a s e of t h e s e is 1957 by 1,787 m i l l i o n drachmas, or tibout 1.27per
cent,couldnot
be regard.ed. a s v h o l l y an i n c r e a s e ir?i z - e s t i b 7 - ef u r a s .T h e r e
wzs, undoubtedlg, same s h i f t from s i g h t d e p o s i t s t o s a v i r g s d e p o s i t s
when
on the former
i n t e r e s t r a t e s on t h e l a t t e r were r e i s e d r e l e t i v e l y t o t h o s e
i n 1756. The Eaak of Greecereg a d s small savings a s 'Insar money".

C u r r e nScD
iygeuhpt o s l t s

1955 Cecenber

'1956Decenber
195'7 Decenber
1953 Xarch
Source:

2;
3

5,100

6,310
7,3u
7,017

Tot a1

29 9.45
2 , '329

3,530
3,403

8 , wi.5
9,24.0
10,%!+.4
10,420

Bank o f G r e e c eB u l l e t i n

Includescurrency h e l d bybanirs.
i'rovisional f i g u r e s .

The l e r g e s t f a c t o r i n Lleincreese i n xeens of p q - n e n t i n 11957 wzs

cred5tgrantedbythe
Senk 02 Greece t o t h e e g r i c u L t u r r 1 p o p u l a t i o n , b o t h
thmu& t h e b g r i c u l t u r a l Ssnk and d i r e c t l y t o o r g e n i z a t i o n s of producers.
Ilext i n i x p c r t a n c e wtis the Governxient ' s support of producers through the
CreCit exteniiedbycomnercialbenks
wes &out
C o n s u e rE n m c i c ga c c o u n t .
e s u a l ir! aTount t o t h ei n c r e a s e i n t i n e and savingsdeposits.There
was
a l s o a c o n t r a c t i v e e f f e c t on t h e money supply from the loss i n f o r e i g n
On t h eo t h e r hand,the
Bank of
exchmgereserves of. t h e 3ankofGreece.
Greecebought a s i g n i f i c a n t a m u n t of go12 sovereignsfromthepublic.
SufTiclec-b d a t a e r e n o t a v s i l s b l e t o
bepreciseabout
e l l t h e f a c t o r s which
affecte? tke development of t h e money supl;..

- 15 b.

PART I1

Commercial bm&

As alrecdy noted, the nos% stril:ing developnent

i:z c o m e r c i a l b a n k i n g
more t h a n
i n 1957 was thegrowth o f p r i v a t ed e p o s i t s :s a v i n g sd e p o s i t s
of t h ey e a r .
Depodoxbled and time d e p o s i t s n e a r l y t r i p l e d i n t h e c o u r s e
s i t s of business and individuals accounted for around 70 per cent
of t o t a l
l i a b i l i t i e s of c o m e r c i a l b a n k s i n 1957 compared t o 60 per c e n t i n 1956.

As a c o r o l l a r y t o t h i s development, a g r e a t e r p r o p o r t i o n ofcommercial
bank c r e d i t was advancedfromthebanks'
own funds. I n December 1957 only
4 p e r c e n t of outstandiag comnerci21 bank loans
was derived from Bapk of
Greecefunds and 10 p e r c e n t f r o n f u n d s
of p u b l i c e n t i t i e s , a g a i n s t
9 per
cent and 15 per cent i n December 1956. Althoughadvancesincreasedsubstant i a l l y i n 1957 (Table 12), theyformed a s n a l l e r p r o p o r t i o n of commercial
banks'tots1assets,vhiledepositswiththe
Bank of Greece ( s e e s e c t i o n on
credit control) increased from
3 per cent of assets in
Decernber 1956 t o 10
p e rc e n t a y e a r l a t e r .
6 l a r g e p e r t of t h e i n c r e e s e was i n b l o c k e d f u n d s
awaiting employment i n aedium-and
long-termloans.4dvances
of c o m e r c i 2 1
banksincreasedbyaboutthe
same amount as t b e and s a v i n g s d e p o s i t s i n
1957, End werenotan
inflationaryfector.
The i n c r e a s e i n c r e d i t seems t o havebeen l e a s t i n very short-term adv a n c e s ( u p t o 3 months) and n o s t i n c r e d i t of 3-6 months, but such f i g u r e s
n e c e s s a r i ul a c kp r e c i s i o n .
The d i r e c t i o n of c r e d i t i n 1957 and 1956, a s
derived from existing statistical sources,
i s shown i n Teble 12.
Table 12.

D i s t r i b u t i o n of C o m e r c i a l Bvlk C r e d i t , 1956-57
( I n p i l l i o n s of drachmas)

"

"
"

Amount outPer
cent
s t anding
December 1956
Indusw
Bills discounted
Working c s p i t a l
Fixed capit a1
Handicrafts

2.207

Tr ads
Dornestic
Import
Export
Tobacco
Other

2,260

"

"

"T- o t a l

914
1,293
"

263

"

944

of
Total
42
-

17
25

"

-5

43
-

729

514

I
_

5,244

of
Total

3,618

35

18 L/

"

426

6
38
Y.

2,890

18

"

4
6

u.
10
-

LO

-9

100

100

Source: Bank of GreeceBulletin.

Does notinclude120milliondrachmesadvances
Corporation,ir,cluded i n "otherti.

47
12

924

2,676.

18
5
6

251

336

Amount outPer
cent
s t anding
December 1957

to the PuSlic

Power

- 16 -

?.L.T I1

The mainchange d u r i n g t h e y e a r seems t o havebeen t h e l a r g e r proport i o n of c r e d i t g o i n g t o i n d u s t q and the lower proportion going
to trade.
The i n c r e a s e t o i n d u s t r y v a s n e a r l y a l l f o r working c s p l t a l . The d e c l i n e
i n t h e p r o p o r t i o n of c r e d i t t o traSiewasalmost
e n t i r e l y accounted f o r by
tobacco. So f e r es theywent,thechanges
i n d i r e c t i o n of c r e d i t were i n
accordancewiththewishesofthemonetaryauthorities.
The r e l a t i v e dehad
c l i n e i n t o b a c c o c r e d i t s was presumsblydue t o t h e l a r g e s t o c k s t h a t
t o b e c a r r i e d over from the 1.956 export season and were l i q u i d a t e d i n 1957.
i i c v e v e r ,c o m e r c i a lb a r k s
were n o t a b l e t o f i n d a t t r a c t i v e o u t l e t s f o r
mediun-and
long-termlending t o pi-ivate industry t o t h e e x t e n t t h a t
+he
a u t h o r i t i e s t a d hoped,

c.

The A g r i c u l t u r a l Bank

The C g r i c u l t u r s l Bank i s t h e main f i n c n c i a l i n s t r m e n t of theGreek

credittoagriculture is
Goverment'ssgriculturelpolicy
and n o s t oftile
channeledthrough it. A t theend o f 19556 t h e 3 E n k hadoutstanding 4,930
million drachnas in. long-term, medium- and s h o r t - t e r m l o a n s t o a g r i c u l t u r e
azd t h i s f i g u r e had r i s e n t o 6,155 m i l l i o n drachmas i n February 1958.
I n 1939 d e p o s i t s r e ? r e s e n t e d inore t h a n h a l f of t h e . k g r i c u l t u r s l Eanlc's
c b p i t a l . The Balilr's c a p i t a l was l o s t i n t h e i a f l a t i o n ,
and a t t h e end of
1956 d e p o s i t s (of a g r i c u l t u r a l c o o p e r a t i v e s , e t c . ) formedonlyabout
8 per
cer,t of i t s l i a 5 i l i t i e s . E;T f a r t h e l a r g e s t s o u r c e
of funds i s now c r e d i t
Tron t h e B d i of Greece,whichaccounted
f o r t h r e e q u a r t e r s of resources
a i t h e endof.1956.Funds
aye alsoderivedfrom
%heGovernmeat'sinvestment budgetand f r o n s p e c i a l f o r e i g n a i d a l l o c a t i o n s .
Idhereas the Bznk o f
Greece financed practicelly all the short-ten loans
of t h e . h g r i c u l t u r a l
3 a ~ 2 ; , i t s share i n longer-termproductiveinvestment
i s Tnuch smaller. About
83 ;3er cent o f the Ften "other zclvancesand c r e d i t s " i n "he balencesheet
of t h e Ea:& of Greece i s s e i d t o c o n s i s t o f c r e d i t t o t h e k g r i c u l t u r a l . Bank.
This item increased
by 1,100 m i l l i o n drachmas i n 1957, b u t s i n c e a d v a n c e s t o
140 x f l l i o n drachmas cver t h e
c c a x r c i . a l banks (also included) declined by
sme period, total credit to the Agricultural
BE~K
would m o u n t t o o v e r
1,230 n i l l i o n drachmas.
.k brezkdownof t h e o u t s t a n z i n g l o a n s
end of 1956 i s &?vel1 i n Table 13.

of t h e 4 g r i c u l t u r a l

Bank a t t h e

- 17 Table 13.

Loznsof

P.U?T I1

A g r i c u l t u r a l Bank, December 1956

( I n n i l l i o n s of drachnas )

Per cent
Snort-term loans
Pledgeloans

1,980

1,4QL,
3,384

Total short-term loans

Medium an6 long-term loans
(Bank of Greece )
N e d i m and long-term loans
(Covernment)
Nediun and long-term loans
(.@KG ir, d o l l a r s )
Loans i n kind

28

68

350

339

294

563
4,930

Source:Agricultural

40

B a n k ofGreece,GovernorsReport,

..,

12
100

1956.

Compzrable f i g u r e sa r en o ta v a i l a b l ef o rD e c e n b e r
1357. Eowever,
according t o p r e s s r e p o r t s , c r e d i t g r a n t e d
by t h e A g r i c u l t u r a l Bank from
low c o s t f u n d s d e r i v e d f r o m the Bsrk of Greece stood at 4,683 miLlion
drachnas i n Februery 1355 conpared t o 3,562 million drachmas i n February
1957, an i n c r e a s e of 1,121 m i l l i o n drachmas.
The developmentof t o t a l c r e d i t t o a g r i c u l t u r e f r o m 1955 t o 1957 is
shown i n Table L!+. These f i g u r e s d i f f e r f r o m c r e d i t g r a n t e d
by theAgric u l t u r a l Bank i n i n c l u d i n g s o a e loms t o p r o d u c e r s g r a n t e d d i r e c t l y b y t h e
Bank o f Greece, and some governmenttobaccopurchases,butexcludeloans
frorn f o r e i g n a i d a l l o c a t i o n s a x i l o a n s t o a g r i c u l t u r a l i n d u s t r y made through
t h e L g r i c u l t u r a l Bank.
The c u l t i v a t i o n l o a n s n o t e d i n T a b l e
l.4 a r e loans designed t o s u p p o r t
farmersuntiltheycanmarkettheircroys,whilecollateral
loans a r e i n tended t o give them room f o r maneuver i n n e g o t i a t i n g w i t h t r a d e r s on
p r i c e s ,t op r e v e n te x p l o i t a t i o n .T h i st y p e
of l o a n h a s beer,ravoredby
t h e Government and has been used increasingly to
make s u p p o r t p r i c e s f o r
tobaccoeffective.

- 18 Table

U+.Credit' t oA g r i c u l t u r e ,

1955-1-957

(1n.rnillions of drackas j

Dee. 1955
Short-term lo-ax
Cultivation loans
Collateral loans
Cther 1/

Dee. 1956

Dee. 1957

3,405

L.270

L, 878
1,359

"

169

Stocks i n A p i c u l t u r e 1 Bank
warehouses (for loans i n k i n d )

761
-

Low-tern lcans
Land b p r o v e n e n t and equipment
FLshing inddstry

845
754.

Total

90

3 9 8@4

4,548

5 ,876

Source: Sank of GreeceBulletin.

I// ~ a i n l y f i n a n c i n gofCooperatives.
rn

lheinT1ation.q.-danger
of t h e C g r i c u l t u r s l E a n k ' s a c t i v i t i e s a r e
we11
r e a l i z e d by t h e 2 o c e t r r g r a u t h o r i t i e s
and e f f o r t s a r e b e i n g
mede t o f i n d
e l t e r n a t i v e s s u r c e s of f i n a n c e t o Bank of Greeceissuefunds.
The main
make funds of t h e c o m e r c i a l b a n k s a v a i l a b l e t o
objectiveappeerstobeto
and
t h eG g r i c u l t u r s l Eank, by E r e o r g a n i z z t i o n of t h e i n t e r e s t s t r u c t u r e ,
a l s o t o a t t r a c t t o t h e Bank more deposits from ir.dividua1 farmers
and
coopsretives.
bit t h e same time, i t i s hoped t o encouragelong-ten.
productiveloanstofarmers
and t o r e s t r i c t o t h e r t y p e s ,
which,tend t o f i n a n c e
cons-mption from newly-created money.

6.

C r e d i t n o l i c v End i n t e r e s t r a t e s

C r e d i t g i v i n g 3y t h e commercialbanks of Greecehasbeenclosely
cont r o l l e d by t h e m o n e t a r y m t h o r i t i e s s i n c e t h e
war. Depositsbeingveiylow
most o f t h e r e s o u r c e s f o r
duriilg.and a f t e r t h e a c u t e i n f l a t i o n a r y p e r i o d ,
l e c d i n g had t o be provided by t h e Bank ofGreece,vhich,
w i t h theCurrency
C o r m i t t e e ,d i r e c t e d i n d e t a i l t h e t y p e s
2ndamount
of l o a n s t o be macie.
mccetaryeutkoritiesare
now t r y i n g t o moveaway
frcm t h i s d e t a i l e d c o n t r o l
more f r e e d o n , zlthough %:?e e u 5 h o r i t i e s c0ntinu.e i n
a22 t o givethebanks
their effort to ensure that credit shall 5e disposed in
ways t h a t w i l l
c o n k - i b u t et oe c o n o m i cd e v e l o p e n t
i n con2itions of i n t e r n a l s t a b i l i t y .
C r e d i tc o x t z o la tp r e s e n tc o n s i s t s
or' r o u g h l yt h r e ee l e n e n t s :l i q u i d i t y r e q u i r e m e n t s ,q d s l i t a t i v e c o r , t r o l t h r o u g h c r e d i t c e i l i n g s , d i f f e r e n t i a l
maximum i n t e r e s t r a t e s and varyicg Froportions of t r a n s a c t i o n s p e r m i t t e d t o
befinanceci.

- 19 -

P.C.XT I1

( i ) Reserverequirexents.There
i s a b a s i c reserve requirement by
which commercial banks must keep with
.the Bank of Greece 8 p e r c e n t of
s i g h t and savingsdeposits.Thisrequirement
i s supplenented, if s e a s o n a l
or other circumstances make it d e s i r a b l e , by f u r t h e r s p e c i f i c p e r c e n t z g e s
determinedbytheCurrency
Committee. For December 1957, and Januaryand
February 1958, t h e s e e x t r a p e r c e n t a g e s were f i x e d a t 1 0 percent, 12 p e r
cent, and 14 percent,respectively.Otherblockeddepositswiththe
Bank
of Greece arementionedbelow.

(ii) h a l i t a t i v e c o n t r o l s .
There i s a r a n g eo fp r i o r i t i e sf o r
credit
givir.2 by the comnercial banks: manufacturing and i n d u s t r y i n g e n e r a l ( i n
>articular lending for capital investment) having the highest priority,
follo~,.redby thetobaccotrade,exporttrede,domestictrade,
and importtrade.
A g r i c u l t u r e i s accomnodated by the.L-gricultural Bank, S p e c i f i c c e i l i n g s a r e
and t o import trade
s e t for i n d i v i d u e l b a n k s f o r c r e d i t t o d o m e s t i c t r a d e
(excel$, f o r i m p o r t s of c e r t a i n b a s i c f o o d s t u f f s ) .
A temporaryextensionof
t h e l i n i t s f o r domestictrade i s a t present i n force,Therearealsovarying
p e r c e n t a g e so fp e r m i s s i b l ef i n a n c i n gf o rc e r t a i nt r a n s a c t i o n s( e . g . ,i m p o r t s
of d i f f e r e n t t y p e s ). Maximum i n t e r.e_ s t r a t e s.a r.e p r e s c r i b e d f o r c o m m e r c i a l
banksaccording
t o typeofloan.
.
.

The monetary authorities are anxious to encourage

bank l o a n s f o r longt e r mi n d u s t r i a li n v e s t m e n t .F o rt h i sp u r p o s e ,i nA p r i l
1957, theyextended
18 months t o 5 y e a r s .
the permissible length of industrial credits from
Leter in the year,
it wzs directed thct comnercial banks should hold
30 p e r
1957 (up t o an amount e q u a l t o 10
cent of a l l d e p o s i t s a c c r u i n g s i n c e J u l y
p e r c e n t of 211 d e p o s i t s ) i n s p e c i a l a c c o u n t s w i t h t h e
Bank ofGreece,
unless the funds concerned were used for
medium-term l o a m t o industry
(loans of over 18 months).Such
d e p o s i t se a r n 5 percent,
and i t i s intended
thattheycanalso
be i n v e s t e d i n t h e new T r e a s u r y b i l l s and i n P u b l i c Po-.der
Corporationbonds,both
of which it i s proposed t o i s s u e i n 1958. F m d s
demand f o r
areaccumulating i n t h e s s d e p o s i t s and it i s a p p a r e n t t h a t t h e
i s now less t h a n t h e s u p p l y , t h e
privatelong-termindustridcapital
from other uses, such
latter being swollen by fcnds deliberatsly blocked
a sl o a n sf o rw o r k i n gc a p i t a l .L l t h o u g hp r i n e r i l yi n t e n d e da s
a qualitative
control,,theblockeddepositsthusperform
a certain credit restrictive
r o l e . I;/

e.

I n t e r ersatt e s

I n t e r e s t r z t e s i n Greece a r e r e l a t i v e l y h i g h ,
a l e g a c yf r o mt h ei n f l a t i o n z r yp e r i o d .I n
1956, r a t e s on bank d e p o s i t s were r a i s e d t o h i g h l e v e l s
systea whichotherwise would havegone
to zttract funds into the banking
into the non-official financial market, or been invested in real assets.
By 1957, t h i s o b j e c t W B S i n g r e a t measureachieved and e l s o r a t e s on

New r e g u l a t i o n s w e r e i s s u e d i n .[iuril 1958 t o o b l i g e commercial b d s t o

i n v e s t , 8s from July 1, 5 percellt of s i g h t and s a v i n g s d e p o s i t s i n
It i s n o t y e t c l e a r
whatgovernmentbondsarereferred
governmentbonds.
to.

- 20 -

P.fi.E;T II

p r i v a t e l o a n s had c0v.e
?.own
f r o mt h e i rp r e v i o u sv e r yh i g hl e v e l s .
The high
r a % e s of i n t e r e s t on depositsveye pro-Jingbad f o r be.+.ing p r o f i t s . I n
1957, the process of reductionbegan and. as 2rom Janua-ry 1, 1958, t h e r a t e
on s i g h t d a p o s i t s ):as reduced fro= 6 p e r c e n t t o 5 per c e n t p e r year, and
on term d e ? o s i t s of a t l e a s t six nmnths from 10 per cent -Lo 9 per cent.
The nainurr! r a t e f o r d e y o s i t s of c e r t a i n b o d i e s s u c h a s p u b l i c u t i l i t i e s ,
railw8ys and o i l conpanies was s e t a t 6 p e rc e n t ,I n t e r e s t
on blockeddepos i t s withtileconaeercialbanks
was n o t t o e x c e e d t h e r a t e f o r s i g h t d e F o s i t s .
A s p c i a l i r l t e y e s t r a t e of ? p e r c e n t WBS s e t f o r r e d e p o s i t s ( o f a t l e a s t 6
months t e r n ) o f t h e . L g r i c u l t u r a l Ea& and Postal Savings Eank w i t h t h e
coymercial ben2:s. As fromApril 1958, t h e r a t e on savings d e p o s i t s up t o
lo@ thousanc?drachmas wss reducedfrom 9 p e r c e n t t o 3 p e r c e n t and on
deFosFtsbetween 100 thousanddrachaas end 200 t h o u s m d drechmasfrom 7 p e r
cent t o 6 nercent.Savingsciepositsarenotperdttec!toexceed
200 thou195e,
sanddrachxas.
Furtize,- reductions i n d e p o s i tr a t e sa r ep r o p o s e di n
I n p a r t i c u l a r , it i s t h o u g h t d e s F r a b l e t o r e d u c e r a t e s o n s a v i n g s d e p o s i , > s
(utthdra.~abLeon demand) r e l a t i v e l y t o t i m e d e p o s i t s t o i n d u c e
a less l i q E i d
d i s t r i b u t i o n of assets.Thereappearstobesoxeoppositionfromco*mercial
balks to further reduction
of d e p o s i t r a t e s , wiiich it i s f e a r e d w i l l arr::st
thegrowth of d e p o s i t s . The conmerci.al bapks would p r e f e r t o i n c r e z s e t h e i r
Bnnk of Greece and obtaining
p r o f i t a a r g i n s by 1,:eeping fewer lunds with the
of publicentities.
more a c c e s s t o f u n &
Loan r a t e s o f commercialbenksare
s t i l l r e l s t i v e l y h i g-~
h , t h en s x i n u n
r e t e r'crloans t o ,rr,a;mfacturing,iriport
and doinestictradebeing
10 p e r c e n t .
The S ~ X ~ E -rIaL
t eXf o r l o a n s t o t h e expo=.t ar,d tobacco trzdes i s 9 p e r c e n t , g
and t h e r e i s a p r e f e r e n t i a l r a t e of 7-10 per c e n t f o r l o a n s t o h a n d i c r a f t s .
'The nonetaryav.thoritles hope t h a t t h e s e r a t e s
will gradually.bereduced
through competition bet:lreen t h e b a r k s and r ' u r t h e r r e d u c t i o r s i n d e p o s i t
rates.
Loans t o f a r m e r s by t h e i g r i c u l t u r a l Bank arenade a t p r e f e r e x t i a l
r a t e s . C o l l t i t e r a l l o e n s ( t oa s s i s tI nn e r k e t i n gc r o p s )a r e
made tit &$- p e r
c e n tt oi n d i v i d u z If s m e r s
and 7-7& p e r cent t o c o o p e r a t i v e s .C s l t i v a t i o n
and
loens and long-term loans are made a t 7 F e r c e n t t o i n d i v i d u a l f a r n e r s
6-6& p e r c e r t t o cooperatives.

T k raxixum rstes T o r d i r e c t l o a n s o f t h e Bank of Greece t o i n d u s t r y ,

t r a d e and h a n d i c r a f t s a r e t h e
szne a s for ioans ofconmercial bar.!rs, b u t
t h e 3an.k a l s o makes c e r t a i a s m a l l 6.5rect i o a n s a t 6 p e r c e n t T h e r e s p e c i a l
n o t conconditions zppear t o warrant i t , and wherscormercialbankscould
pete. The r e d i s c o u n tr a t e of t h e Bank ofGreece i s 11 p e r c a t , b u t t h i s
i s - l a r g e l yi c o p e r a t i v e .
It a p n l i e so n l yt oi c d u s t r i a l
b i l l s ? and i n p r e s e n t
5anlrshzve l i t t l e need of
condittons of rising bank d e p o s i t s , t h e c o r m e r c i a l
recourse t o t h eC e n t r a l Bank. Thereare a l s o l i n i t e d f e c i l i t l e s f o r c o m e r c i c l banks t o Gverciraw t h e t r sccour,ts x i t h t h e 3arJc ofCreece ~t 12 p e r c e n t .

I//

F o r t h ec a r r e n tm e r k e t t n g
pel-iod f o rt o b a c c o ( M a y , June) t h e r a t e on
l o a n s t o th;e tobacco expo,-t t r e d e h a s b e e n r e d u c e d t o
4 per cent t o
a s s i s t i n thepurchase and d i s p o s a l o f s t o c k s onhand.

- 21 -

P.&T

I1

TheBank ofGreece h a s v a r i o u s low r a t e s o f i n t e r e s t a t

which i t s u p p l i e s
f u n d st ob a n k i n gi n s t i t u t i o n sf o rc e r t a i np u r p o s e s .R a t e s
of 2-5 p e rc e n t
apy?Lv t o s m a l l b a n k s f o r s p e c i a l c r e d i t s
approvedby t h e CurrencyCommittee.
4 p e r c e n t I s charged on p u b l i c e n t i t y f u n d s r e - h n t :.to.:.the:l$ortgage-B?&
forcertaininciustriallong-termloans,mostlyrequiringspeciaiapproval.
o
v interest credit granting i s t h a t t o
The nost s i g n i f i c a n t of the Sanks l
t h e A g r i c u l t u r a l Bank a t r a t e s of
per cent.

1-15

The p r e s e n t s t r u c t u r e of i n t e r e s t r a t e s is one of t h e f a c t o r s i n c r e a s i n g
t h e dependence of t h e A g r i c u l t u r a l Bank on Bankof
Greecefinancing.
The
B g r i c u l t u r a l Balllr cannot afford t o pzy t h e p r e v a i l i n g h i g h r a t e s f o r d e p o s i t s
made with it byfarmers end cooperatives, when i t s own loans are made a t
p r i v i l e g e d rstes of around 6 t o 7 per cent. It t h e r e f o r e re-lends these
9 p e r c e n t and r e l i e s on Bank ofGreece
depositstothecomnercialbanksat
l-& p e rc e n tf o r
i t s a g r i c u l t u r a ll e n d i n g .
Lower d e p o s i t
f u s d ss e c u r e da t
r a t e s would e n a b l e t h e A g r i c u l t u r a l Bank t o make more use of savings depos i t s f o r grantir?gloans t o a g r i c u l t u r e .
f.

CaDit a 1 narke t
-

The Greek a u t h o r i t i e s are anxious t o encourageanactlvecapitalmarket

and t o mobilizesavingsforecononic
development.Although
a tp r e s e n tl o n g t e r mp r i v a t ei n d u s t r i a li n v e s t m e n to p p o r t u n i t i e sa r en o to f f e r i n gt h e m s e l v e s ,
t h e r e i s a shortage of c a p i t a l f o r a g r i c u l t u r a l i n v e s t m e n t and government
development p r o j e c t s .

I n 1957, l e g i s l a t i o n , t o which much importance i s attached, was passed

on t h ei s s u e of new s e c u r i t i e s . I n t h e
f i r s t p l a c e ,t h e Government is empowered t o i s s u e T r e a s u r y b i l l s , guaranteed by t h e Bank of Greece andpcryable
t h e r e on m a t u r i t y a t t h e i r nominalvalue.
They w i l l a l s o b e d i s c o u n t a b l e by
t h e Bank ofGreecebeforematurity.
The bills a r e t o be of a m a t u r i t y of 3
months t o a y e a r , b u t i t i s hoped t h a t t h e y w i l l be renewed automatically
by t h e i r h o l d e r s a t m a t u r i t y ,
and t h a t , w h i l e h a v i n g t h e a t t r a c t i o n
of shortterm investment,they w i l l , i n f a c t , become a long-term one. It i s a l s o
will become r e g u l a r h o l d e r s o f t h e b i l l s
and
hoped that the comnerciai banks
t h a t t h e s e n a y become, i n time, t h e i n s t r u m e n t s of amoney marketthrough
w i l l be a b l e t o i n f l u e n c e t h e l i q u i d i t y
of
whichthemonetaryauthorities
thebanksby
means of openmarketoperations.Fundsheld
a t t h e Bank of
be used
Greece i n connection with long-term industrial loans (see above) can
forthesebills.
They w i l l a l s o be sold t o t h e Bank of Greece t o c o v e r t h e
d e f i c i t on the investment budget
and w i l l r e p l a c e t h e S p e c i a l Advances
account now drawnon by t h e Government f o r p u b l i c i n v e s t m e n t .
Secondly, private firms o r p u b l i c c o r p o r s t i o n s e n g a g e d i n p r o d u c t i v e
activities can issue bonzs for the installation
of new equipment o r e x t e n sionstoexistingplants,
Thesebonds w i l l have a d o l l a r o r p r i c e i n d e x
on i n t e r e s t payments.The
clause, and w i l l e n j o yc e r t a i nt a xe x e m p t i o n s
t o 300
P u b l i c Power Corporation made a f i r s t issueofsuchbonds,anounting
m i l l i o n drachmas, i n A p r i l .
The c a p i t a l v a l u e i s l i n k e d t o t h e p r i c e o f
buyers! option. I n t e r e s t , v h i c h i s
e l e c t r i c i - t y , o r t o t h ed o l l a r ,a tt h e

tax Tree, i s 8 percent.

It is hoped that,thesebonds
w i l l betaken up by
thebenks and e l s o by thepubLic.
They shouldbecompetitivewithsnal
savings deposits, xhen interest rates
on t h e l a t t e r have been reduced.

P r i c e s were s t s b l e i n Greece i n 1957. The wholesalepriceindex

dewhile t k e r e t a i l p r i c e i n d e x
and t h e c o s t of l i v i n g
c l i n e do v e rt h ey e a r ,
TLe b d i c e s have declined o r r e m a i n e ds t a b l ei n
195e
f n d e xr o s es l i g h t l y .
(Tabl-e 15

>.

Table 15.

P r i c e Fiovements, 1956-58
(1952 = 100)

- " " " " " " "

"
"
"
"

Wholesale
r?rices
Retail
Frices
Cost
$.thens
Athens-Piraeus
Decembsr 1356
De cenber 1957
March 1958
Source:Balk

"
"
"

152.5
149.7

14.5.7

138.5

139.6
13s. i3

o f Liviilg
.b-thens
"

137.8
141.9
U l .8

of Greece 5 u l l e t i n and P r e s sr e p o r t s .

The illcrease i n t h e c o s t of l i v i n g i n d e x i n 1957 was duemainly t o a

of bread.
The s t a b i l i t y of p r i c e s i n 1957
r i s e is r e n t s , and i n t h e c o s t
o;;red much t o t h e f a c t t h a t except, for t h e l a s t f o u r months t h e r e was l i t t l e
i r z l a t i o n a r y e x p a n s i o n of money incomss. W e n t h i s e x p a n s i o n d i d o c c u r i n
i t s iDpactprimarily
connectionwithgoverraentwheatpurchaseoperations,
beceme r e f l e c t e d i n t h e r i s i n g volume of imports and i n i n d u s t r i a l ! product i o n which had unemployed capacity.
Therewere no iEp0rtarl-t wage changes i n 195'7, i n c o n t r a s t t o 1356,
x h e nc o n s i d e r a b l ei m r e a s e st o o kp l t c e .
A s m a l li n c r e a s e (1 d r a c h m ) i n
t h e ~Lninumd a i l y wage paid t o i n d u s t r i a l v o r k e r s was granted and c e r t a i n
adjustments were made f o r t h e b e n e f i t of c i v i l s e r v a n t s .
The Government
i s a m i o u s t o r e s t r a i n wage demands,and was helped t o do so i n 1957 by
is, however, pressure for a r i s e i n s a l a r i e s
t h e s t a b i l i t y of prices.There
of c i v i l s e r v a n t s .

- 23 5.

PLRT I1

Bzlence of oaynents

F i g u r e s f o r t h e Greek balance ~f Fayments i n 1956 End 1957 are given

The currentaccount imyroved i n 1957, an i n c r e a s eI nt h et r a d e
a rise in invisible earnings
and seamen's
d e f i c i t b e i n g more t h a n c f f s e t b y
and emigrantremittacces.
However, t h e r e s t i l l renained a currentaccount
d e f i c i t of over$90 m i l l i o n . U.S. a i d u t i l i z e d was only one t h i r d a s much
8s i n 1956, and 2 s u b s t a n t i a l p a r t of t h e d e f i c i t was ffnanced by a d e c l i n e
i n f o r e i g n exchangereserves,
and anincrease i n s h o r t - t e r m c o m e r c i s 1
indebtedness.

i n Table 16.

Table 16.

Balance of P q m e n t s

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

1.

2.

3.
4.
5.
6.

Exports
Imports (c. i . f . )
Trade b a1ance
Net s e r v i c e s
Donations

7.

Balence (3 f 4 .L 5 )
* i v a t ec a p i t a l( n e t )

6.

Investment
T r a6e c r e d i t s
Other
Financing of d e f i c i t

U.S. a i d
Cle a r i n g b alences (increase )
Gold and f o r e i g n exchange
EXT c r e d i t
Other
Source:

194

476

"

-282

96
74
-

223
521
-298
122
86

-90
55
-

35
-

-3

-10
21
2
-1

-112
48
22
25
1
64
68

-2
1

31
31
-7
23

Besed on f i g u r e s of Bank of Greece and U.S. Kission t o Greece.

Exports increased bj~13 p e r c e n t i n 1957 and imnorts 5y 9 per cent.

The composition of e x p o r t s i n 1956 and 1957 i s g i v e n i n T a b l e 17. Tobacco
exports formed 43 p e r c e n t of t h e t o t a l i n 1957 (compared t o one t h i r d i n
1956) and accounted for n o s t of t h e i n c r e a s e i n t o t a l e x p o r t s
in 1957. P a r t
of t h e i n c r e a s e i n t o b a c c o r e c e i p t s
was theconsequence o f a carry-over o f
&out $10 m i l l i o n from t h e 1956 exportseason.
A
t p r e s e n t (May 1958) t h e r e
i s a xerketable crop from the
1957/58 season of 80 thousand tons t o which
nust beadded 20 thousand tons of stocks from the previous crop
i n the
hands of t r a d e r s and t h e S t a t e . T h i s t o t a l e x p o r t a b l e
volumeof
100 thousandtonscompareswith
80 thousandtons i n 1956/57. Greektobacco i s now
faced with strong conpetition
i n f o r e i g n m a r k e t s and with increased domestic

- 24 -

EP2.T I1

p r o h e t i o n i n s o x ei 2 p o r t i n g E w o p e a x c o u n t r i e s .P r i c e s
a r e s-aid t o be
competitive 6nd aye i ng e n e r z ll o w e rt h a ni n
1957. The a u t h o r i t i e se x p e c t
e e r n i n g st , of a 1 3i n
1953 compared t o 1957. lSeceiptsfrom cotluon, which
h e s recentl;; becoL1e an isporkant export product fcr Greece, reached
$29
m i l l i o n i n 1956, p a r t 2 7 a s a r e s u l t of e x c e p t i o n a ls a l e st oF r a n c e .I n
1957, i n s p i t e cf s good crop,exports were only $15 milli.on. From
Septernrer 1957 t o I,iarch 1958 e x p o r t s of c o t t o n arnounted t o 19 thousand
a yearbefore.Greece
tonscorqared t o 30 thclzlssnd t o n s i n t h e s m e p e r i o d
h a s b e e n m e e t h g sone p i c e r e s i s t a n c e i n f o r e i g n n e r k e t s ar,d f e a r s have
a l s o S e e ne x p r e s s e da b o u tt h ee f f e c ti n
Europe of s a l e s of U.S. s u r p l u s
cotton. It i s c o t e x p e c t e dt h a tt h e
good r e s u l t s of 1956 will be repeate-i
i n i95E. S a l e s of s u l t a n a s and c u r r a n t s were s a t i s f a c t o r y i n 1957, parti:,.
as a r e s n l t of a drcught ir h s t r a l i a . There was an encouragingincrease
i n e x u o r t s of f r e s h f r u i t t o north-westEurope,
f r o n $7 m i l l i o r , i n 1956 t o
$11 m l l l i o n i.n 1957. E x F w t s i n - t h e c u r r e n t seasoRhcve so f a r ( u p t o
1958) exceededthose i n t h e saEe period of 1956/57. Although demeni?,
i s expanding, some d i r f i c u l t i e s i n t r a n s p o r t and narketing are being
experienced a t present.Exports
of n i n e r e l s were h i t by t h e r e c e s s i o n i n 1957 and d i dn o tc o m
up t oe x p e c t a t i o n s .
On t h e silole, a s m e l l - r i s e i n
exportproceeds i s p o s s i b l e i n 1958. Ir?,
the f i r s t f o u r months of 1958
t o t a l e x p o r t s were $30 m t l l i o n , t.he same a s i n t h e f i r s t four noaths of

1957.
Table 17.

KainZxports

by Comnodity

( I n m i l l i o n s cf U. S. d o l l e r s )

Tobrcco
Currents
SLllt 6x2s
Cotton
@lixe o i l
C1i v e s
bines
Fresh fruit
Ores and r-etsls
Cement.
T e x t i l ep r o d u c t s
Lidies. and. skins
Sponges
Other

18

1956

1957

19581957

65
18
9
29

88

25
1
1

22

4
4
7

18
3
1

29
194

Tot E
Source:

Eznk ofGreecefigures.

u
15
6

4
1-1
16
3
4

2
27

219

Jan. -Feb.

Jan. -FeS.

3
5
1
2
2
2

- 25 Imports by major cnnmdity groups

i n 1956 and 1957 are shown i n Table
18. Theseimports,whichexcludethoseonsuppliers'creditforwhichthere
i s no breakdown, i n c r e a s e d by $33 mil3.on i n 195'7 i n s p i t e of a d e c l i n e of
$26 m i l l i o n i n i n p o r t s of a g r i c u l t u r a l p r o d u c t s ( g r o u p s
1 2nd 2 i n Table 1 8 )
as a r e s u l t o f t h e good h a r v e s t s i n Greece.knincrease
of $10 m i l l i o n was
r e g i s t e r e d i n i n p o r t s of f e r t i l i z e r s and of $i5 m i l l i o n i n l i q u i d f u e l s , t h e
l e t t e r nainly a r e s u l t of pri.ceincreases.
The stimulus t o i n d u s t r i a l production provided by increased
money incorr,esof t h e a g r i c u l t u r a l p o p u l a t i o n
of i n d u s t r i a l machines and s p a r e s
vas reflected i n large increases in imports
($,I8 m i l l i o n ) , i n semi-processediron
and s t e e l and i n t e x t i l e f i b e r s . SoEe
expellditurecfprofits
of thebusinesscormunity
was indicated by incressed
i n p o r t s ofcGnsu.neT
goods of a semi-luxury character.
Table 18.

(Inmillionsof

1.

Main Importsby

Commodity

doll=)

U.S.

1956

102

Food. e t c .
me a t and whe a t ? l o u r
F a t s and o i l s
Refined suger

Me s t
2.

him1 Feeding S t u f f

3.

Chemical products
Fertilizers

4.

Fuels

5.

Netals
"
-and

6.

Textile f i b e r s , etc.

7.

Raw wool
Wool y a r n s
Cotton fabrics
Other f a b r i c s
Timber. p u l p , e&.
Woods
Other raw m a t e r i s l s . e t c .
Machinew end eauinnent
Fiiscelianeous nanufactues

and p e t r o l e m
Liquid fuels

Total
~

nrodacts

oetal nro2ucts

Raw cotton

8.
9.
10,
~~~~

~~-

1957

I/

~~~~

~~

Source:Based
on f i g u r e s of U.S. Mission t o Greece.
Excludesirnports on s u p p l i e r s ' c r e d i t s .

- 26 -

P,mT I1

h p o r t s on a t r e c s a c t F o n sb a s i s (less i 9 p o r t s on s u p p l i e r s ' c r e d i t )
were $162 m i l l i o n i n t h e f i r s t f o u r moaths of 1958, compared t o $160 m i l l i o n
of ini n t h e same period of 1.957. i't i s difYica1-i; t of o r e c a s tt h ec o u r s e
p o r t s as a whole i n 1958, s i n c e t h e s e d e p e c d t o
a conslderableextenton
t h ev o l m e o f d o x e s t i ca g r i c u l t u r a lp r o d u c t i o n .T h i ss f f e c t sn o to n i yt h e
t"e i n d i r e c t dermnd f o r imports or" raw
v o l m e of l o o d i m y o r t s , b u t a l s o
m s t e r i e l s andconsuiner goods stimulated by thespellding of a g r i c u l t u r a l
incomes on domestic industrial products.
There i s considerableanxietyinGreeceaboutthe
growthof
imports
i nr e c e n ty e a r s
and i t s e f f e c t onforeAgnexchengereserves.Iridirect
measures or" c o n t r o l l i s g t h e i n c r e a s e ,
suc!I z s ti;;hteningcredit
end encouragingimpol-t savi25 i x d u s t r i e sa r e ur,derccnsiderasion.
It h a sa l s c
beensuggestedthbtgcver-anentimports,such
BS f e r t i i h e r s , from clear:.:.
agre.dment coun%I;ie,c; shs-.ld ba Eade on.13- a g s i , x t .c , x .l v- 0, ~ 3 GL-BO::
~t
eirports
The r e g i o n a l d i s t r ? . b u t i o n of f o r e i g n t r a d e changc:c; l i t t l e i n i:'57.
Table 19 shows e x p o r t s =Ed importsaccording t c n s i n w e a s and trz:,;L:g
p e r t n e r s . The p r o p o r t i o n of exportsgoing t c I.T3starn %nope ~ p p e t~o s
50 E a s k r n Europeardthe
iG.ddle
have declined, while the pro?ortion going
E,ast h z s increased. The p r o p o r t i o n of imports coming froa XesternEurcpe,
however,increzsed.
The mostLrnportant t r z d i n g p s r t n e r s f o r Greecewera
t h eU n i t e dS t a t e s
and Germany.The
volume of i n F o r t s from t h e Ur?itsd
1956 sad 1957
S t a t e s i s t o a l a r g e e x t e n t goverz.ed by a i da l l o c a t i o n s .I n
irnportsfrom Germany greatlyexceededexports.
Efforts arebeing made t.2
i n c r e a s e Greek e x p o r t s of wine,tcbacco,
and f r u i t and t h u s t o improve tlie
t r e c i i n gp o s i t i o nv i t h
Germany. To provide time T o r t h e s e e f z o r t s t o b e a r
fruit, t h e Greek a u t k o r i t i e s hope t o contract sxlsstantiel long-term
c r e d i t s from GermaEr t o r e d u c e t h e s t r z i n on t h e i r o v e r - a l l c u r r e n t
a c c o u n t p q m e n t s ? o s l t i o n which t h e l a r g e t r a d e d e f i c i t v i t h
Germany
i?pcse s
.

..

- 27 Table 19.

Tredeby

PJ&T I1

Xain Regions and Countries, 1956, 1957

( I n m i l l i o n s of drachmas )
E X P O R T S

1456

cent
Per
cent
Fer
Amount of T o t a l Amount

u. s .A.

677
157
-

LEtin Arrerica

Western EuroE
France
Germany
Italy
Ketherlands
Sweden

3,128

761

W.

E 2s t e r n EuroDe
etc.

U.S.S.R.

12
-

684
-

North hrrieric_a

1,133

632
139

Czechoslovakia
Yugoslavia
S t e r l i n g .Area
United
Kingdon

48

115
163
628
538

Mi.ddle E a s t

EU?t
Other

12
-3
56
13
20
11
2
1

1956

1957

917
-

of T o t a l

904
39
3 324
444

Amount

2,344

Source:

?er c e n t
of T o t a l

2,495

46
5
16
11
3
3
Y

I
.
_

1,7C2

542
l-42

73

15
4

7,969
937
2,957
1,549
467
559

2
2

3
li
11

u
-

-31
-

-3

100

Total

Per c e n t
of T o t a l Amount

18
2,4572,598 17

11
1
3

I I4 P - 0 R T S
1957

u_

6,585

13,912

100

Bank oZ Greece, l i o n t h l v B u l l e t i n .
There wasa

b i g i n c r e a s e i n non-merchandise r e c e i p t s on currentaccount

i n 1957. I n p a r t i c u l a r ,r e m i t t c c c e s of seamen and e m i g r s n t s i h c r e a s e d by

$75 m i l l i o n , anounte?.
over $30 aj-llion(Table 2 0 ) . E m i g r e n t s r e a i t t z n c e s ,a t
t o almostone-third
of c u r r e n t i n v i s i b l e r e c e i p t s i n
1957. S h i p p i n gr e c e i p t s
slunp ( a l t h o u g h t h e l a t e s t
are expected t o f a l l off i n t h e c u r r e n t s h i p p i n g
will
availablefiguresdonot
show i t ) andemigrantsremittancesprobably
i n c r e a s e l e s s f a s t t h a n i n 1957 because o f t h e r e c e s s i o n i n t h e U n i t e d S t a t e s
end G,anada. Ket r e c e i p t s frcm t r a v e l r o s e by $8 m i l l i o n i n 1957 and f u r t h e r
i n c r e a s e s zi-3 e x p e c t e d i n 1958.

- 28 Table 20.

S e r v i c e s and Donations

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

1958195719571956

Jan. -Fsb.

Jan. -Feb.

122
-

Services
(net)
Shipping rexi t t a n c e s
TrEve 1
NkTO I n f r a s t r u c t u r e
M i s c e l l a n e o u sr e n i t t a n c e s
Other
Dohakioris
Exigrant s remittances
U.S. g i f t s (U.S. I;L 480, T i t l e 111)
"

65

16
-

26

12
25

-7
86
75

"-

11

"
"
"
"
"

Source:

Bank ofGreecefigures.

11

"

-1

12
-

11
1

F r i v a t e c a p i t a l movements, z p a r t f r o r r , t r a d e c r e d i t s , r e s u l t e d i n
a net
i r f l o w ofebout $33 m i l l i o n i n 1957. About one-third of t h i s c o n s i s t e d of
d e p o s i t s acd i n v e s t n e n t s m d e u n d e r t h e
1953 law f o r encouragenent .of
foreigninvestxent.
The r e s t v a s a m i s c e l l a n e o u s i t e m , c o n s i s t i n g ' p a r t l y
of e m i g r a n t s ' r e m i t t a n c e s c l a s s i f i e d a s c a p i t t l
and p a r t l y of r e p a t r i a t i o n
of c a p i t a l by re-exigrants o r prospectivere-emigrmts.
'

U.S. a i d u t i l i z e d . i n 1957 was about (j23 m i l l i o n ,a sa g a i x s t

$68
m i l l i o n i n 1956. The use of a i d i n 1958 will depand on theanount elloceted, on t h ep r o p o r t i o n of e g r i c u l t u r e ls u r p l u s e si n c l u d e d ,a n 6
on t h e
Greek harvest. U.S. a i da l l o c a t e df o rt h e
U.S. f i s c a l y e s r 1957/58 is
a t p r e s e n t p u t a t <;35 milliol?, conFsred t o $53 r r d l l i o n i n 1956/'57,b u t
it i s doubtful whether the whole ax.oun-1; of a i d will be used i n t h e n e r i o d .
There-hesrecentlybeen
a s h i f t i n t h e proposedcomposition of z i d ? awsy
f r o n z g r i c u l t u r a l s u r p l u s e s and towsrci f r e e l y u t i l i z a b l e procurement
a u t h o r i z a t i o n s and t h i s may f e c i l i t a t e t h e f u r t h e r u t i l i z a t i o n or" t h e
extendedaid.
The remainder of the balance o f i;a-nlents d e f i c i t i n 1957 was financed
f r o n an i n c r e a s e i n f o r e i g n s u p p l i e r s ' c r e d i t
and by a f e l l i n gold and
f o r e t g n exchangeholdingscf
Ebout :,,;21
million.

6.. Foreign exchanEe r e s e r v e s

Foreignexchangereserves
o f t h e Ea& ofGreece,exciusive
accountszre shown below ( i n m i i l i o m of d o l l a r s ) :
Other
ofEnd
:Tar
Cold
S t e r lDi m
o l lC
a rusr r e n cTi eost a l

1955
1956
1957

10.9
9.5
13.3

4.0

5.3

2.5

Source:Figuressuppliedtothel4ission

169.9
174.6
162.4

0.5

0.7
0.7

by t h e i3ank ofGreece.

of cleering

185.3

190.1

178.9

- 29 -

PABT I1

According t o t h e s e f i g u r e s , g o l d
and foreign exchange reserves f e l l
by $11 n i l l i o n i n thecourse of 195'7. The d i f f e r e n c e between t h f s f i g u r e
and t h e f i g u r e of $21 m i l l i c n shown i n t h e b a l a n c e of paynents(Table 16)
appears t o l i e i n a paynent of $10 m i l l i o n ' t o EPU on account of the period
January-Decpmber 1957, which was n o t made u n t i l J a n u a r y 1958. Greece had
a l e r g ed e f i c i tw i t h
EPU duringJanuaz-December
1957, b u t h ed e f i c i t
$12 million, which was
was reduced by e x t r a o r d i n a r y c a p i t a l o p e r a t i o n s t o
covered as t o &LO m i l l i o n by p z p e n t i n gold and d o l l a r s and as t o $2.0
m i l l i o n by EPU c r e d i t . Net c l e a r i n g b a l a n c e s w i t h
non-EPU c o u n t r i e s increased by $10.7 m i l l i o n i n 1957, a s a r e s u l t of a l a r g e c r e d i t b a l a n c e
with Egypt ($12.9 m i l l i o n ) .A t t e n t i o n
i s b e i n gg i v e nt ot h er e d u c t i o n
of
This balance.
F o r e i g n c o m i t n e n t s of Greece a r e e s t i m a t e d t o have r i s e n by about $48
m i l l i o n i n 1957. O f t h eo u t s t a n d i n gd e b to n
December 31, 1957, approximately
$75 aillion represented long-term corn-itinents
t o t h e U n i t e d States, of which
$25 m i l l i o nc a n be r e p a i d i n localcurrency.Obligationsfromlong-term
l o a n s and c r e d i t s f o r econorilic developmentandimport
of c q i t a l e q c i p a e n t
were estimated at about
$48 m i l l i o n , of which onlly $13 m i l l i o n were imported
on t h e b a s i s of t h e law f o re q c o u r a g l n gf o r e i g ni n v e s t n e n t .
The balanceof
f o r e r g n commitments i n c u r r e d s i n c e t h e e n d
of thewarrepresentedcomercial
c r e d i t f o r Lmports.

PART I1

-3 011.. Developments i nt h eR e s t r i c t i v e

System

Iilo s i g n i f i c a n t change took place

i n t h e Greek r e s t r i c t i v e s y s t e m s i n c e
t h e l a s t c o n s u l t a t i o n s wereconcluded in December 1956. (Forchanges i n
t h e b i l a t e r a l a g r e e r r e n t s of Greece, see below. )
Exchanpe r a t e s t r u c t u r e

"

a u n i t a r y exchange rate s t r u c t u r e .T h e r e
i s no es.tablished
drachma, b u t t h e o f f i c i a l r a t e
of Dr 30 p e r U.S. d o l l a r
has beenapprovedby
t h e Fucd. The buyiogand s e l l i n g r a t e s are Dr 253.90
and Dr 30.10, r e s p e c t i v e l y ,p e r U.S. d o l l a r .O r d e r l yc r o s sr a t e s
are maintained for other currencies.

Greecehas

par v a l u e f o r t h e

-k p o r t s

and import payments

In p r i n c i p l e , a l l i m p o r t s i n t o G r e e c e o t h e r t h a n t h o s e c o n t a i n e d
in
two l i s t s (List A and List B) a r e l i b e r a l i z e d , i.e., t h e y may beimported
without a 1 i c e n s e . u 'Goods i n L i s t A, which are mostly of
a l u x u r y type
s u c h a s r e p t i l e skins, f u r s , p r e c i o u s s t o n e s ,
wrist watches, etc., r e q u i r e
l i c e n s e sf r o mt h eI d i n i s t r yo fC o m e r c e .
As a rule, a l l applicationsfor
l i c e n s e s a r e approved. I n 1956 L i s t A iEportsrepresentedabout
1 p e rc e n t
ofmachinery,mechanicalequipmentandfarm
of all imports.Certaintypes
implements contained i n L i s t B are s u b j e c t t o l i c e n s i n g f r o m t h e K i n i s t r y
of Industry. The c r i t e r i a f o r i s s u i n g o r r e j e c t i n g l i c e n s e a p p l i c a t i o n s
f o r L i s t B i t e m sa r e :w h e t h e rt h ei t e mr e q u e s t e da r ee f f i c i e n t l y
and
sufficiently produced in Greece,
andwhether the intended import i s f o r
productiveinvestment.In
1956 about 90 p e r c e n t o f a p p l i c a t i o n s
for
l i c e n s s s f o r List B i t e m s wereapproved.
L i s t B imports i n 1956 were about
2.5 p e r c e n t of all imports.
S i n c e Lists A and B t o g e t h e r r e p r z s e n t o n l y a small percentage of t o t a l
i s inprincipleliberelieed,i.e.,they
Creekimportc,thebulkofimports
may be importedfrom a l l countrieswithout e l i c e n s e . However, althoughthe
bulk ofimports i s n o t u n d e r d i r e c t l i c e n s i n g c o n t r o l s , t h e r e a r e v a r i o u s
res t r i c t i o n s , c o n t r o l s and procedures on i m p o r t s t h a t have a b e a r i n g on t h e
degree of liberalization.
I nG r e e c e ,c e r t a i ni t e m sa r et r a d i t i o n a l l yu n d e r
state trading, f o r
reasons of p u b l i ch e a l t h ,p u b l l co r d e r ,o rr e v e n u e ;f o ri n s t a n c e ,K a t c h e s ,
k e r o s e n e ,s a c c h a r i n ,n a r c o t i c s ,c i g a r e t t ep a p e ra n dp l a y i n gc a r d sc a n
be
by t h e s t a t e monopolies under the control
of t h e
imported into Greece only
1.5-nistry of Finance. The A g r i c u l t u r a l Bank of Greecehas t h e sole r i g h t t n

r/

"
"
"
"

"
"
"

Greekimport
l i b e r d i z a t i o n i s autonomousand u n i l a t e r a li nc h a r a c t e r ,
i . e . , it i s not
connscted
w i t h any o b l i g a t i ottnoh e
OGC.
By a
d e c i s i o n o f t h e OZEC Council,Greece was g r a n t e d a waiver o f t h e
o b l i g a t i o n t o l i b e r a l i z e its i m p o r t s t o t h e same e x t e n t as o t h e r
OEEC c o u n t r i e s .

.~

-3 1-

PART I1

importsulphur,coppersulphate,
and f e r t i l i z e r s , Wheat and f l o u r are
imported by t h e Y L n i s t r y o f T r a d e f o r
i t s own a c c o u n t u n d e r t h e I n t e r n a t i o n a l
Wheat Agreement; h o w e v e r , , p r i v a t e i m p o r t e r s may also beallowed t o import
wheatandwheatflour.Sugarandseed
o i l are also imported by t h e S t a t e .
Altogether, about 1 5 p e r c e n t of t o t a l Greek imports i n 1957 were under
s t a t e t r a d i n g regime, A l l imports by governmentalorquasi-governmental
agencies valued a t Icore t h a n $l,OOC f.0.b. are s u b j e c t t o t h e p r i o r a p p r o v a l
of t h e U n i s t r y of C o m e r c e . F o r p u b l i c u t i l i t y o r g a n i z a t i o n s , t h e
limit is
$10,000. Governmentalimports i n e x c e s s of t h e above lMts must be made by
public tenders.

The i m y o r t a t i o n a n d d i s t r i b u t i o n o f m o t i o n p i c t u r e s a n d t h e t r a n s f e r
of
r o y a l t y e a r n i n g s i s governed by s p e c i a l r e g u l a t i o n s o f t h e i f i n i s t r y
of Commerce,
of petroleum
There are also special regulations with regard to importation
products

A n o t h e r f e a t u r e o f t h e Greek r e s t r i c t i v e s y s t e m i s t h e s o - c a l l e d i m p o r t
approvalprocedure,Beforeshipment
of t h e i r goods,importershave
to obtain
t h e a p p r o v a l (i.e., t o g e t e x c h m g e a l l o c a t e d
for t h e i r i E p o r t s ) o f a comm e r c i a l bank o r , i n c e r t a i n cases, of t h e C e n t r a l Bank, i r r e s p e c t i v e of
whethertheimportconcernedrequires
a license o r i s l i b e r a l i z e d ,I m p o r t
D.
approvals are issued either through procedirre Eor procedure

Procedure E: T h i s p r o c e d u r e a p p l i e s t o i m p o r t s o t h e r t h a n t h o s e f i n a n c e
by IC.4 funds and t h o s e of governmental agencies i n e x c e s s o f c e r t a i n limits
(see procedure D, below)from t h e United States and
Canada; from EPU c o u n t r i e s
when payment i s e f f e c t e d t h r o u g h EPU o r i n s t e r l i n g ; f r o m c o u n t r i e s w i t h
which
Greece h a s concluded bilzteral agreemects, provided settlement
is effected
through the sppropriate clearing account, snd any other country except
and North Korea, provided payment i s made i n an EPU
Albania,KainlandChina,
currency.

Under procedure E, i m p o r t e r s a r e r e q u i r e d t o a p p l y t o an a u t h o r i z e d
c m m e r c i a l bank for an import approval
(i.e,, a l l o c e t i o r - o f f o r e i g n e x c h a n g e )
beforeshipment of t h e goods. Together w i . t h t h e i r a p p l i c a t i o n s , i m p o r t e r s
must f i l e a pro forma invaice visaed
by t h e l o c a l C n m b e r of Commerce and
I n d u s t r y , u a written statement concerning the mount
of anycommissioninit i s r e q c i r e d , The i s s u a n c e o f
v o l v e d ,a n dt h ei m p o r tl i c e n s ew k r e v e r
import approvals by commercial banks under procedure
E is a routine cperation,
Procedure D: A l l importsnotcovered
i n procedure E a r e s u b j e c t t o Fro- c e d u r e D, underwhichtheSank
of Greeceissuestheimportapproval.Specifi c a l l y , p r o c e d u r e D a p p l i e s t o (1)go03s importedunder ECA programs; (2)
goods imported by g o v e r n m e n t a g e n c i e s a n d o r g a n i z a t i o n s i n q u a n t i t i e s v a l u e d
a t more t h a n $1,000 f .o.b,, and by
p u b l i c u t i l i t y companies valued a t more
(3) t o s h i p m m t s o r i g i n a t i n g i n c o u n t r i e s o t h e r
than
t > a n $10,000 P.0.b.;
t k o s e e l i g i b l e u n d e r p r o c e d u r e 3 o r goods t o beshLpped o r p a i d f o r i n a
msnner o t h e r t h a n p r o v i d e d u n d e r p r o c d u r e
Z; and ( 4 ) cases involving
E and
m o d i f i c a t i o n of t h e terms of the apFrcvel granted under procedure
t h e p u r c h a s e of goods abandoned i n customsby tne consignee.

J
l

Visaeing i s notnecessary i f thevalueoftheshipment

$203 f , o . b . o r $220 c . i r f o

i s less t h a n

-32-

PLRT I1

Importapproval i s n o t r e q u i r e d f o r c e r t a i n i m p o r t s , e . g . , o r d e r s p l a c e d
by a f o r e i p n governmentand t h e MATO p r o j e c t c o n t r a c t o r s f o r m a t e r i a l s a n d
suppliesintendedforprojectsin
Greece.Importapprovals,bothunderprogoods a r e s h i p p e d from
edure 3 andprocedure D, must b e o b t a i n e d b e f o r e t h e
. f o r e i g n p o r t s , as o t h e r w i s e h p o r t e r s a r e l i a b l e t o fines ranging from 2 t o
15 p e r c e n t o f t h e c.i.f.invoicevalue
o f theimports.Importseffected
this r e g u l a t i o n .
by t h e S t a t e o r by S t a t e a g e n c i e s a r e n o t s u b j e c t t o
A s a g e n e r a l rule, imports may be p s i d i n on2 of t h e following two ways:
(1)by opening a documentery l e t t e r of c r e d i t ; o r (2) a g a i n s t p r e s e n t a t i o n of
s h i p p i n g do a m e n t s .

A l l imports may b e p a i d f o r by a l e t t e r o f c r e d i t , b u t f o r
goods cont a i n e di n L i s t A, theopeningof
a l e t t e r o fc r e d i t
i s obligatory.
The
will d e p o s i t i n
opening of a documentary c r e d i t i m p l i e s t h a t t h e i m p o r t e r
Drachma
drachmae withhisGreekbankthe
wholeamount of t h e c r e d i t .
t h e issuance
equivalents of foreign exchange must be paid simultaneously with
of t h e import approval i f t h e import i s to be effected under procedure E and
w i t h i n 20 d a y s f r o n t h e i s s u a n c e i f t h e i m p o r t i s t o be effected under procedure D.
Payments f o r i m p o r t s a p i n s t p r e s e n t a t i o n o f s h i p p i n g
documents 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 ona d e f e r r e d payment b a s i s (time d r a f t ) . Payments f o r importson a
deferred basis (tine drafts) are allowed only for approximately
90 products
contained i n a s p e c i a l l i s t c a l l e d L i s t P. As a r u l e , time d r a f t s must be
p i d w i t h i n s i x months of the issuance of the customs clearance permit, In
t h e case of certain types of machinery, accessories, and spare parts, valued
a t more than $5,000 c . i . f .p e rc o n s i g n m e n t ,t h em a t u r i t yd a t ef o r
time
d r a f t s i s s e t a t 15 months. The K i n i s t r y o f Commercemay
zuthorizeeven
l o n g e r payment periods or approve imports
on time d r a f t basis of c o m o d i t i e s
which are n o t i n c l u d e d i n List P.
Importation of all commodities except those
i n L i s t k may be s e t t l e d
a g a i n s t s i p-h t d r a f t s , i . e . , c a s h a g a i n s t s h i p p i n g
documents at d e s t i n a t i o n .
is requiredtodepositwithhisbank,
after
In such a c a s e , t h e i n p o r t e r
o b t a i n i n g t h e relevant import approval snd before the date of shipment
abroad, a c e r t a i np e r c e n t a g e of t h ec . i , f .i n v o i c ev e l u e .
Goods included
u d e r List P, i.e., goods t h a t m y beimported on a deferred payments basis,
8iId gcods consisting mainly
of f o o d s t u f f s u n d e r a l i s t c a l l e d List F a r e
exemptfrom depositrequirements.For
goods i n c l u d e d i n lists c a l l e d L i s t
F-50 and L i s t F-100, t h e d e p o s i t s are 50 and 100 p e r c e n t , r e s p e c t i v e l y .
a 1 5 per cent deposit
(List F-15).
The r e s t of t h e i m p o r t s a r e s u b j e c t t o
No d e p o s i t i s r e q u i r e d i n t h e c a s e
of i m p o r t s e f f e c t e d bygovernment
services, public utility coxqanies, or for the account of the Agricultural
Bank ofGreece.Importersofcomoditiesfinancedkith
I C A f u n d sa r e req u i r e d t o d e p o s i t w i t h a commercialbank w i t h i n t e n d a y s f r o m t h e d a t e
of
issuance of.the relevant import
approval, i n a d d i t i o n t o t h e above cash
deposits,,another cash deposit. or
bank g u w a o t y e q u i v a l e n t t o 10 p e r c e n t
of t h e c.i.f. invoice value.

-3 3-

PART I1

Invisibles

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
which are g r a n t e d
freelyforexpensesincidentaltotradetransactions.
Exchange i s also
a l l o c a t e d a u t o m a t i c s l l y by t h e Bank of Greece and i t s b r a n c h e s f o r v a r i o u s
c a t e g o r i e so fn o n t r a d ei n v i s i b l e s
up t o s p e c i f i e d amounts.
Thisgroupincludes exchange allocations for students! expenses
(up t o a maximum monthly
andCanadaand
$125 f o r
amount of $225 f o r s t u d e n t s i n t h e U n i t e d S t a t e s
othercountries),comercialandprofessional
t r a v e l , tourism (up t o $GOO
per trip per person), transfers
o f s a l a r i e s by NATO eEployees and foreign
t e c h n i c i a n s , r e m i t t a n c e s for t h e a s s i s t a n c e o f n o r t h E p i r o t s l i v i n g i n
Albania, ar,d
some
m i s c e l l a n e o u st r a n s f e r s .I ns p e c i a lc a s e s ,r e n t s ,s a l a r i e s
on accountof
andpensions may be s e n t a b r o a d i n p a r t . T r a n s f e r s a b r o a d
specifiedcategoriesofinsurance(e.g.,ships
and airplanes,merchandise
transportation, fire, accident
and l i f e i n s u r a n c e ) 2 r e a l s o a u t h o r i z e d
up
t os p e c i f i e dp e r c e n t s g e so ft h e
amounts owed. Rentalspayableonforeign
may
macninery and materials, patents, technical processes and trade-marks
be f d l y t r a n s f e r r e d . P e r s o n s t r a v e l i n g a b r o a d
may t a k e w i t h them a
maximm of Dr 450 i n Greek banknotes.
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 must be surrendered
t o t h e Esnk of Greece i f t h e holder of t h e claim wants t o s e l l . He cankeep
theclaimsunused,
but c a n n o t s e l l t o any buyer but the
Eank of Greece, and
cannctusethebelances.Foreignexchangeproceedsfromshipping
2re exeropt
from t h e s u r r e n d e r r e q u i r e m e n t , b u t s h i p o w n e r s h a v e t o p a y a n y t a x e s , f e e s ,
Greece i n l o c a l
etc., and must covzr their disbursements and expenses in
currency obtained through the sale of foreign exchange to the
Bank of Greece.
I n d i v i h a l s may b r i c g i n a maximum of Dr 4.50 i n Greek banknotes.
Exports and export payments

All e x p o r t s are subjject t o i n d i v i d u a l - l i c e n s e s .

The Ydnistry of Comerce
h a s ,i np r i n c i p l e ,t h ea u t h o r i t yt og r a n te x p o r tl i c e n s e s .
However, it has
u e l e g a t e d t h i s power t o t h e Greek C e n t r a l Eank which i s s u e s t h e n e c e s s a r y
l . i c e n s e s ,e x c e p ti n
a few special.cases.
Most items may be f r e e l y e x p o r t e d
w i t h o u ta n yq u a n t i t z t i v er e s t r i c t i o n s .m a n t i t a t i v el i m i t a t i o n so rp r o h i b i t i o n s may be a p p l i e d f r o m t i m e t o t i m e t o
some e x p o r t s (e,. olPd-e o i l ,
scrap iron, etc. ) in order to snsure an adequate domestic supply.
Proceeds from exports must be brought into
t h e country and sold to the
C e n t r a l Eank w i t h i n f i v e monthsfrom t h e d a t e of the export of the gcods.
The f o r e i g n exchange which exporters have
t o s u r r e n d e r m2y be reduced, up
t o 5 p e r c e n t , by t h e amount o f t h e commissiondue t o t h e i r a g e n t s abroad.
htervening banks are authorized to approve such reductions, under certain
conditions.
Konresidentaccounts
A l l drachma assets of nonresidents must be d e c l a r e d and held onblocked
a c c o u n t s .S u b j e c tt ot h ea p p r o v a l
of t h ee x c h a n g ec o n t r o la u t h o r i t i e s ,
balances on such accounts
may be deposited with a c o m e r c i a l bank as a s i g h t
deposit (under the control of the
Eank of G r e e c e ) w i t h i n t e r e s t
at 5 per cent,

PART I1

-3 4-

i n v e s t e d i n s e c u r i t i e s o f f i c i a l l y l i s t e d on t h e S t o c k &changewhich are
t h e n d e p o s i t e d w i t h . a bank, or u s e d f o r t h e p u r c h a s e o f r e a l
estate i n
Greece. The s u b s e q u e n ts a l eo fs u c hr e a le s t a t e
i s permitted,provided
t h a t t h e drachma proceeds are. c r e d i t e d t o a blocked account i n t h e name
seller, In specialcasessuchproceedsmightbetranso ft h en o n r e s i d e n t
f erred. abroad gradually.
C a pital transactions
T r a n s f e r s of capital. abroad by r e s i d e n t s r e q u i r e s p e c i a l a p p r o v a l .
Residents may r e p a t r i a t e i n t o Greece t h e i r c a p i t a l h e l d a b r o a d , i n t h e
form of gold (exceptjewelry) or f o r e i g n exchange.Repatriationofforeign
exchange balances held
by residents through importation of goods
(own
exchange imports) require
a special license of the Kinistry of
Commerce.
As a rule, no l i c e n s e s a r e i s s u e d f o r
commercial Itown exchange" i n q o r t s
o r i g i n a t i n g i n c o u n t r i e s such es t h e U n i t e d S t a t e s which maintain no c o n t r o l s
on f o r e i g n exchange.

Under L e g i s l a t i v e Decree No. 2687 of October 31 1953, approved foreign

investments in Greece which are expected to
promche n a t i o n a l p r o d u c t i o n o r
o t h e r w i s e c o n t r i b u t e t o t h e economicadvancement of the country can be
2re not repayable
grantedpr2ferentialtretitment,butsuchinvestments
earlisr than one year from the date
of i m p o r t a t i o n o r f r o m t h e time the
e n t e r p r i s e began t oo p e r a t ep r o d u c t i v e l y ,
Vhen any e n t e r p r i s eo 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 i s g r a n t e d terns more f a v o r a b l e t h z n t h o s e which had
been accorded t o a similar e n 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 w i t h f o r e i g n
capital, similarly favorzble terms
w i l l beextended t o t h e p r e v i o u s l y
e s t a b l i s h e de n t e r p r i s e ,a tt h er e q u e s t
of t h eb e n e f i c i a r y .S p e c i a lg u a r a n t e e s
are provided i n case o f r e q u i s i t i o 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 h t a n a n n u a l r a t e n o t
exceeding 10 p e rc e n t .T r a n s f e r so fd i v i d e n d s
on e q u i t y c a p i t a l may not
exceed 1 2 p e r c e n t p e r y e a r ,
and t h o s e f o r payments of i n t e r e s t on l o a n
c a p i t a ln a yn o te x c e e d
10 per cent;,
however, anma1 earnings below these
limits can be supplemented by e a r n i n g s i n e x c e s s o f s u c h
limits from o t h e r
years.
Deviations from the general regulations
may be approved f o r f o r e i g n
capital imported to develop exports
of a g r i c u l t u r a l a n d m i n i n g p r o d u c t s
o r . i n v e s t e d i n e n t s r p r i s e s of s p e c i a l i m p o r t a n c e t o the economy. S p e c i f i e d
f o r e i g n , s h o r t - t e r m i n v e s t m e n t s may a l s o 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 m e n t
i n r e s p e c t of t h e repayment of c a p i t a l and t h e t r a n s f e r o f i n t e r e s t .

-B i l a t , e r a l

arrawements

Greece has bilaterzl trade and/or

paymentsagreementswith
12 OEEC
countriesand 20 non-OEEC c o u n t r i e s( s e e ApGendix ). SinceGreece i s a
rnember o f t h e EPU, a l l i t s b i l a t e r a i paymentsagreementswith
OEEC
countries function within the frmework
of t h e m u l t i l a t e r a l EPU system.
OEEC members include Greek &port
q?Jotas
'Some of the trade agreements with
b o t h . f o r goods subiect t o l i c e n s i n g ( L i s t A and List B goods) and f o r

-3 5-

PART I1

certainliberalizedproducts.Inthosecasesquotas
may be considered as
b a s i c a l l yi n d i c a t i v e .
Thesequotasprovidethepartnerswithanassurance
of continued trade i n the event of the items in question being deliberalized.
Ifosst agreements with OEEC p a r t n e r s a l s o provide import quotas
f o r GreekproZucts on which t h e t r a d i n g p a r t n e r s a r e s t i l l a p p l y i n g r e s t r i c t i o n s .
The non-OEEC coun5ries with which Greece maintains bilateral trade
and
paymentsagreements
are:Bulgaria,Czechoslovakia,Egypt,Finland,
Hungary,
"Japan, - Foland, Rumania, Spain, U.S .S .B, , Uruguay, andYugoslavia.In
addition, Greecehasconcluded
a payments agreementwith Israel, trade agreerents with India, Iraq,
Libya, Syria, Taiwan and Tunisia, and a p r i v a t e
compensation agreement with East Germany.
During 1357, most of t h e above-mentionedagreements were extended o r
renewed v i t h o u t any s i g n i f i c a n t change except those with Russia and Yugos l a v i a . On January 19, 1957 t h e o l d t r a d e
agreementbetweenRussia
and
Greece was replaced by a new agreement which s e t t h e v a l u e of t r a d e f o r
1957 a t t h r e e times theprevious'level.Furthermore,the
new agreement
increzsed the swing c r e d i t from $1 m i l l i o n t o $2.5 million. On April 9,
1957 G r e e c e g r a n t e d t r a n s f e r a b i l i t y t o 10 per cent of t h e Yugoslavian
exportearnings.
During 1957 Greececoncluded two new b i l a t e r a l agreements,
i.e., trade agreements with Libya
and Taiwan, whichwere signed i n Xarch
and December respectively.
I n 1958 tradeagreements have beennegotiated
with India and Tunisia.

A11 payments agreements concluded

by Greece with non-GEEC c o u n t r i e s
provide for clearifig accounts.
Most o f them a l s o contain swingmargins.
Under most agreements e x t r a swing o v e r d r a f t s a r e t o be corrected by s e t t l e ments i n convertible currencies o r mutuallyagreedcurrencies.
In some
agreements, barter transactions
o r l i n i t e t i o n of t r a d e are also envisaged
i n o r d e r t o s e t t l e e x t r a sving overdrafts.
I n general, trade agreements
wi%h non-OEEC countries include iinport
q a o t a s f o r b o t h goods contained in licensing l i s h (A and B) and f o r
l i b e r a l i z e d Greek impor%s, which should be i n t e r p r e t e d as being basically
Greek l i b e r a l i z a t i o ns y s t e m
i n d i c a t i v e . A s i s pointedoutabovs,the
a p p l i e s t o imports from b i l a t e r s l agreement countries as well as t o o t h e r
go0d.s n o t s p e c i f i e d i n
Lists A and B can be imported
countries, i.e., import
from clearing agreement countries without license either under procedare
E
which i s t h e g e n e r d system o r m d e r procedure D, One minorexception t o
tile above statenent concerns imports
fromJapan of f o u r commoditiesincluciing
eye glasses and l e n s e s for spectacles, faence ware, t e x t i l e p r o d u c t s and
p e n c l l s . The commercial r e l a t i o n s between Japan and Greeceare a t p r e s e n t
gQverned by a b i l a t e r a l t r a d e andpayments agreement signed onNarch 12, 1955.
Bsfore the signature
of t h a t agreement a l l imports of Japanese origin were
s u b j e c t t o l i z e n s i n gf o r m a l i t i e s ,S i n c et h e
agreement erne i n t o force, all
llberalized comnodities except the
f o w mentioned above maynow be imported
withov-t l i c e n s e , s u b j e c t t o
bank approval. The l i c e n s e s f o r t h e i m p o r t a t i o n
of four commodities a r e i s s u e d i n t h e sameway as goods i n L i s t A, i.e., by
a s p e c i a l c o r n n i t t e e i n t h e IV!inistry ofComerce,

-3 6-

PAlZT I1

In order t o complete t h e b i l a t e r a l a r r a n g e m e n t s o f Greece,mention

should be made of b a r t e r o r p r i v a t e compensation t r s n s a c t i o n s which, though
considerably reduced i n scope in recent years,
tire s t i l l allowed i n c e r t a i n
cases. The p r i n c i p a l e x p o r t c o m o d i t y s u b j e c t
t o p r i v a t e b a r t e r i s tobacco
is
and the principal country w i t h which these transactions are conducted
East Germany. BartertransactionswithIsraelthroughtheclearingaccount
a l s o occu?y a ratherimportantplace.Otherbilateralagreementcountries
with which b a r t e r t r a n s a c t i o n s are permitted are Czechoslovakia, Poland
and
iiungary.TradewithAlbania,
Irm, andMainlandChina,
with whichGreece
on a p r i v a t e b a r t e r b a s i s .
has no payments agreements, are conducted entirely
According t u recent press reports,
Graecehas also allowed a barter transa c t i o n between a United Kingdom s t e e l firm and a Greek f r u i t exporting
concern.
I n 1955, about 17.1 p e r c e n t of Greece's exports and approximately
8 percent of imports were with non-EFU b i l a t e r a l p a r t n e r s ,
I n 1956,
t h e above percentages increased t o 17.6 and 11.7 per cent, respectively.
It appears that during 195'7 t h p r e hasbeena
f u r t h e r s h i f t of Greece's
f o r e i g n t r a d e toward non-OEEC b i l a t e r a l agreement countries.

- 37 B i l a t e r a l TradeandPaymentsAgreements

PART I1
APPENDIX

of Greece

AUSTRIA
Date of conclusion and duration
Trade and paymentsagreementsigned
h r c h 1, 1950. Subsequently
renewedandmodifiedseveraltimes.Latesttradeprotocoleffectiveto
June 30, 1956.
Pavmmts arrangeme&
S e t t l e m e n t sa r ee f f e c t e dt h r o u g ht h e
FPU. Paymentsagreementprovidesfcrclearingaccount
i n U.5. d o l l a r s k e p t a t A m t r i a n N a t i o n a l
Bank ( c r e d i t m a r g i n of $ls5 m i l l i o n ) i n t e r e s t f r e e
Tradearrannempnts

Goods t o beexchangedup
t o $6 m i l l i o n e a c h way. Greekimportquota
f o r b s t r i a n mechinery.Austrianquotas
f o r various Greek exports.

Date of conclusion and duration

O r i g i n a l paymentsagreementsignedEecember
29, 1948. Superseded
by agreement of A p r i l 24, 1952. Terminates on threemonths'notice
or
on EPU e x p b a t i o r , .

-Pavmsnts

arrangements

Settlements effected through the

EPU agreement provides for a
c l e a r i n g ~ccountw i t h i n t h e limits of FPU. Balances not settled monthly
under EPU ape s e t t l e d i m m e d i a t e l y i n gold o r acceptable exchange,

""-Tradearrangements
None.
BULGARIA

Date of c o n c l g i o n and d u r a t i o n
Trade and paymentsagreementssigned
December 5, 1953. Duration
one y e a r ,b u tt a c i t l ye x t e n d a b l e .M o d i f i e db y
a protocolsigned on
May 12, 1956, Valid until December 31, 1956. T h i s p r o t o c o l was renewed
f o r t h e year 1957 and i s t o be renewed f o r 1958.

-Paments

arrangements

Currency of account: U.S. d o l l a r s . Swing limit: $250,000 ( n o t o

be e x c e e d e d ) . S e t t l e m e n t w i t h l i s t e d
goods w i t h i n six months of terxination,

.38-

PART I1
A P E NDM
.. .

Tradearrangements
Trade agreenent established quotas for individual commodities,
t o t a l i n g $3,5 m i l l i o n a n m a l l y e a c h way.

CHINA
(TAIMAN)

-Date

of -luston

and d u r a t i o n

Tradeandpaymentsagreementsigned

Deceinber 1957.

Pmments arranqernPayments a r e made i n U a F . d o l l a r s .

Trsde

arrangemnnts

Commodity l i s t s withquotas.
Mew l i s t s of commoditieswere i n
of Piarch 9, 1955. These
e f f e c t i n 1955 i n accordanca with the Protocol
l i s t s were replaced by new onesby v i r t u e o f t h e h o t o c o l of February 2,
1956, which we-:e i n e f f e c t in 1956 and 1957 and a r e t o berenewed. i n

1958.

PART I1
APFENDIX

Date of conclusion and d u r a t i o n

Paymentsand

tradeagreementsignedFebruary

i s renewedannually.Recentlyextendeduntil

-Payments

25, 194.9. Agreement

August 24, 1958.

arranzements

Settlements are effected through the

EPU.

Txade arranpements
Trade agreements include import quotas
by Denmark f o r c e r t a i n goods
r e s t r i c t e d from Greece.Greekimports
fyomDerxnark
liberalized.

EGYPT
DPte of conclusJon and d u r a t i o n

-Pavments

arrangemen-&g

Clearing account ("Collector

Account") i n LE w i t h National Bank of
EgJpt. Xaximum d e b i tb a l a n c e E 250,000, F i n a ls e t t l e m e n ti 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 b o t h p a r t i e s .
Trade a r r a m e m e n t a

"
"

Lastprotocol(September
1, 1954) d i d n o t i n c l u d e
l i s t s ofgoods.
A new
T r a d e c o n s i s t s mainly of F g y p t i a n c o t t o n andGreektobacco.
p r o t o c o l was signed with Sgypt on August 15, 1957 amendingand suppleof 1953.
mentingthepaymentsandtradeagreements

FINLAND
Date o f conclusion

"
"
"

and

duration

Tradeandpaymentsagreement,i-iarch24,
1949. S i n c et h e n ,t r a d e
agreement prolonged and modified several times, recently
on June 1,
1957 f o r 12 months.
PavmentsArrangements
Settlements through a d o l l a r a c c o u n t f o r t h e
Bankof Greecewith
t h e Bank of Finland. Swing c r e d i t o r i g i n a l l y s e t a t
$0.75 m i l l i o n ,
r a i s e d t o $1.0 m i l l i o n . Vhenswing i s e x c e e d e d , t h e c r e d i t o r c o u n t r y
hastheright
t o decreaseexports;thedebtorcountrycan
pay the excess
by t h e two central banks.
balpnce i n gold o r f o r e i g n c u r r e n c i e s a s a g r e e d

- 40 -

PART I1
AFPE NDXX

The outstanding balance on t e r m i n a t i o n t o be s e t t l e d by d e l i v e r i e s of

goo& by the debtor country u-lless otherwise agreed upm
by t h e two
central banks.
The c r e d i t m a r g i n was f i x e d a t $1.5 m i l l i o n f o r t h e
periodfrom Jume 1, 1957 t o M a y 31, 1958.
Tradearrangements
Commodity l i s t s withquotas.Finnishexportscomprise,
among o t h e r
t h i n g s , sawn timber,callulose,timber,newsprint,andcardboard.Greek
e x p o r t s i n c l u d e raw c o t t o n , a g r i c u l t u r a l p r o d u c t s , h i d e s a n d c a s i n g s .
FRANCE

-Date

of conclusion and d u r a t i o n

PaymentsagreementApril
Z 9 1956;tradeagreement,July
5, 1948,
Since then, trade agreement m o d i f i e d and renewed s e v e r a l t i m e s , r e c e n t l y
onJune 28, 1956 (foryearendingJune
30, 1957).

Pavments a r r a n e ~ m e n t s
S e t t l e m e n t sa r ee f f e c t e dt h r o u g ht h e
EPU. Paymentsagreementprovides for clearing account in French francs
of t h e Bank ofGreece w i t h
BmquedeFranceanddevaluationguarantee.(Greececanrequest
in
U.S. d o l l a r s o r Owiss f-rancsbalances i n t h e a c c o u n t e x c e e d i n g t h e
S
$
1million; also Greece can
'buy f r s n c s a g a i n s t a n y
equivalent of V
currencies acceptable to France c )
Tradearrangements
On the French side, imports outside
EEC l i b e r a l i z a t i o n l i s t s a r e
s u b j e c t t o quotas,Latestagreement(June1956)indicatesFrenchquotas
(Volume o r v d c e ) f o r v a r i o u s
Greek goods.Greecehasundertaken
to
issueFormitsforspecifiedimports
(F 10 m i l l i o n e a c h f o r p r e c i o u s
stones, gold o r s i l v e r y c u t l e r y , and furs; and F 25 m i l l i o n e a c h f o r
perfumes a.nd s i l k g o o d s ) t h a t a r e s u b j e c t t o l i c e n s i n g ,

-Date

of conclusion and d u r a t i o n

Trade2ndpaymentszgreementbetween
Bank of GreeceandNotenbank
of B e r l i ns i g n e d December 1953.. Tecitlyrenewable.
New agreement
fromprevious one.
signed 3Jovember 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
Pavmsnts

"

arranpem-

C l e a r i n ga c c o u n ti nt e r m s
of U.S. d o l l a r s . I n
November 1 9 5 6c r e d i t
margin w a s r a i s e d from $250,0CO t o $500 m i l l i o n w i t h a d d i t i o n a l s e a s o g a l
i n c r e a s e November-ikrch of $200 m i l l i o n .

'

PART I1
APPENDIX
Tradearrangements

Lists of goods t o beexchanged.Value

$6 million.Bartertransactionsarealso

of trade estimated at about

allowed.'

FEDERAL REPUBLIC OF GERMANY_

Date of conclusion and duration

"
"
"
"

February 12, 1951: p r o v i s i o n a l t r e a t y of commerceand tradeagreeuntil September 30, 1956. New payments
ment, prolonged(fourthrenewal)
agreement, June 28, 1955, v a l i d i n d e f i n i t e l y ; t e r m i n a t e s
on t h r e e
months' notice o r on EPU expiration. A f i f t h supplementarytradeagreement signedOctober 31, 1956; v a l i d t o September 30, 1957.
Pavmsnts arranpements
Settlements effected through the

EP'J.

Novernber 1953 protocol provides West German c r e d i t of DM 200

m i l l i o n f o r Greekdevelopment(one-half
s u b j e c t t o immediate use), 6 per
c e n ti n t e r e s t , up t o 8 years.Prnjectsincludechemical/netalproduction,
oilrefineries,rollingstock,
power s t a t i o n s .
Tradearrangements
Under 1956 agreement,only one quota l i s t , valued a t about $2.5
million, i s established for c e r t a i n Greek exports.

Date of conclusion and duration

"

Trade andpayments agreementconcludedJune

1954.. Renewed i n a n
amended form by a prntocol signed
on June 28, 1956; v a l i d until Pky 31,
1957, Renewed f o r t h e periodJune 1, 1957 t o liley 31, 1958.
..
Payments aryanpements
Clearing account w i t h aswing

limit of LE$450,000.

Tradsarrangements
The June 1956 protocol has

set the volw'e

of t r a d e a t $7 million.

Date of conclusion and duration

The f i r s t t r a d e agreementbetweenIndiaandGreece
was signed on
February
1958 and will be i n f o r c e up t o December 31, 1959. Rough
lists have beencompiledwithoutquotasconcerningexchangeable
gods.

U.,

-4.2

These l i s t s a r e v a l i d up t o 3ecember 31, 1958 a t whichtime new l i s t s

w i l l becompiled,Greece
w i l l t r e a ti m p c r t e dI n d i a np r o d u c t si n t h e
maimer GEFC products are t r e a t e d , I n d i a
w i l l t r e a t Greekimports i n t h e
way i m p o r t s f r o m t h e s t e r l i n g a r e a a r e t r e a t e d . F o r n a v i g a t i o n t h e
most-favored-nation clause
i s mutually granted,

Payments a r e made i n pounds s t e r l i n g .

m e of conclusion and d u r a t i o n
ConcludedParch

1956, pending t h e a p p r o v a l of the Parliament.

Pavments arrangements

None.

Payments e f f e c t e di n

pounds s t e r l i n g .

Trade arrangements
Tradeagreement only. D e l i v e r i e s of I D 280,000 ea.ch way provided.
Greecewouldexportminerals,chemiczls,pharmaceuticals,andoliveoil,
and import barley and corn.
.~

Ism L

Date of conclusion and d u r a t i o q

Paymentsagreement July 1, 1954, between B m k Lo& and Bank of

Greece.Validoneyear,extended
t o June 30, 1957. F x t e n d e da g..a.i nt o
June 3G, 1958.

-Payments

srranEements

..
.

Noninterest-bearing account in
U.S. d o l l a r s i n Bank of Greece for
B m k LO&:
swing limit $150, GOO, but object should be to keep
payments
balanced,

Trade

arrangements

Tradeon a comFensation basis may also be authorized through the

clearing account.

-i3-

PART 11
APFF NII IX

Date of conclusionandduration
Tradeand p a p e n t sa g r e e m e n t s March 31, 1947. RevisedApril
A p r i l 1 9 4 9 , andIfarch 1951, Lest r e v i s i o n of agreementsFebruary
1953. Paymentsagreement v a l i di n d e f i n i t e l y ;t r a d ea g r e e m e n tv a l i d
months, successively extended until June 30, 1958.

1948,

4,

18

Paymentsarra.nEements
%ttlements are effected through the
Trade

EPU.

Rrranpements

"I_

Greekquotasforcertaln
luxury goods t h a t a r e s u b j e c t t o l i c e n s e ,
as w e l l as I t a l i a n q u o t a s f u r r a i s i n s andcarobbeans(fodder).

Date of conclusion and d u r a t i o n

Tradeandpaymentsagreementsigned
March 12, 1955, e f f e c t i v e t o
March 31, 1956; extended t o March 31, 1958. Automaticallyrenewable
everyyearunlessterminated
with 90 days'notice.
The two p r t i e s a r e
may be when t h e swing
f r e e t o suspend exports or imports as the case
l i m i t i s yeached.

P Pments arranqemeSettlement i s throughanopenaccount

i n terms of U S . d o l l a r s h e l d
by t h e Bankof J a p a n f o r t h e B m k of Greece. Swing l i n i t is $500,000; no
cashsettlementprovided.
Thetwo p a r t i e s a r e f r e e t o
suspendexports
OF imports as t h e c a s e may be when t h e swing limit i s reached.
Trade arranpements
Trade t a r g e t s c a l l for exports each way a t $2,500,000 f o r e a c h
annualperiodagreed
upon. Japantoexportmachinery
($1,1 m i l l i o n ) ,
metalproducts,chemicals,etc,,andGreece
toexportmineralproducts,
o l i v e o i l ,c o t t o n ,t o b a c c o ,e t c .

Both sides
imbelance

may exercise import

or export control to rectify trade

LIBYA
Date of conclusioq

"
I

and
dura.tion

The Trade Agreement of March 16, 1957 i s t a c i t l y renewed f o r y e a r l y

periods. Lists of excha,ngeablecommoditiesareattoachedo
It provides f o r
a mutual granting of the most-favored-nation clause for customs duties
and navigation,

.44.

P U T I1
APRNDM

Paventsarrangements
Payments i n pounds s t e r l i n g .

me of

conclusion and d u r a t i c n

Payments agreement of August 14, 1951; e f f e c t i v e i n d e f i n i t e l y from

September 1, 1951. r i t h e r p a r t y may a t anytimegivethreemonths'notice
of termination. The agreement i s immediatelyterxinated when t h e EPU
Agreement ceases t o apply t o e i t h e r orbothccuntries.Appliesto
Surinam and Netherlands Antilles.
Tradeagreement of February 5, 1953, with additional protocol
1, 1954.; t a c i t annualrenewal.Fitherparty
may
effectiveuntilFebruary
give two months' notice of termination,Applies
t o "urinamandNetherby exchenge
of
notes on
5,
landsC.r;tilles.Lastrevised
and
extended
1955, f o r periodFebruary 1, 1955 t o February 1, 1956. A one-year
extension without change was agreed byexchenge of l e t t e r s on June 23,

1956.

-Pavments a r r a n e e m a
Settlements are effected through the
EP'J. Payment agreementprovides
that the Netherlands Bank maintain an Interest-free guilder ,account for
t h e Bank of Greece ("A Account!'). Payments arecentralized.Conversion
Of drachma/guildeF i s on b a s i s of o f f i c i a l U.S, d o l l a r r a t e s quoted by
t h e two c e n t r a l banks. Obligations resulting
from EPU membership w i l l
prevailoverthis
agreement
A t expiration, the !!A kccountll w i l l be
kept open f o r n i n e months (with liquidstion provision and.exchange
.
guarantee).

-Trade

arrangements

The 1953 agreement e s t a b l i s h e d t h e t Greece would issue import

l i c e n s e s and any other necessary peraits without any discrimination
a9
regerds other CEEC members, forKetherlandsproductscontained
i n the
Greek importprogramand
i n accordance with the regulat:ons
in force i n
Greece. I n the additionalprotocol,assurancesaregivenregardingthe
a p p l i c a t i o n of t h e Greek "GI procedure," and consultetion i s prescribed
i n c a s e of s u b s t a n t i a l changes i n e i t h e r country's tra.de and payments
system. The 1955 exchange of notesestablishedthat
exchanges w i l l take
place on t h e b a s i s of t h e import aEd e x p o r t l i b e r a l i z a t i o n m e e s u ~ e s t o
be taken by the Retherlands or Greece, whether within the franework
of
CEEC d e c i s i o n s o r i n a n
autonomous fashion, without any discrimination
OEYC coxntries.Safeguard.clause
i n c a s ee i t h e r
asregardsother
countrychanges i t s import system s u b s t a n t i a l l y . Two s h o r t commodity
l i s t s withuotasforeachitem:fiveitemsforimportintothe
Netherlands, one ?perfumes) for import into.,G- ,eece, Nachinery and spare parts
l i s t e d by the Greek E n i s t r y of Industry (and requiring
a permit of t h a t
Yinistry) will be accorded t h e same t r e a t n e n t a s when importedfromany
other EPU member.

..

-45

PART I1

APFENDM

NCRWAP

"

Date of conclusion and d u r a t i o n

"

Trade andpaymentsa.greenent,
Xarch 12, 194.9. Payments p r o t o c o l s
of March l.4, 1950 and May 13, 1951. Last known t r a d e sgreementextension
t o December 31, 1955.

Pavmentsarranpements
Settlements are effected through the

FPU.

Tradearranpemerlts
May 1955 T r a d e P r o t o c o l s t a t e s
commercialexchangesbetween
t h e two
c o u n t r i e s w i l l be e f f e c t e d on t h e b a s i s of e x i s t i n g l i b e r a l i z a t i o n of
each. Nzway e s h b l i s h e d q u o t z s f o r c e r t a i n r e s t r i c t e d i m p o r t s ,
from
Greece:dyied
f r u i t s , luKr 2, j million;miscellaneous, N K r 1 5 m i l l i o n .
POLAND

"

Dateofconclusion

and d u r a t i o n

TradeagreementOctober
22, 1952 between Chambers ofComerce.
Payments and t r a d e agreementJanuary 11, 1954, between Bank of Greeceand
A new t r a d e andpaymentsagreementbetween
the
National Bank ofPoland.
twogoverpments.Signed
J u l y 3, 1956.

-P a v e n t s

arranrenents

h y m e n t sa r ee f f e c t e dt h r o u g hc l e a r i n ga c c o u n t s .

A swing c r e d i t of

$5OC,OCO i s provided.Greece
allows s e l f - l i q u i d a t i n gb a r t e rt r a n s a c t i o n s
w i t h Foland when credit under the agreement
i s exhausted.

Trade

arrenzemen3

"

Trade l i s t s i n c l u d e i n d i v i d u a l

Greekimportquotas

totalling

$4c,13million f oz- specLf9ed Polish goods, and Polish quotas

(volume or v a l u e b a s i s ) f o r v a r i o u s
Greekgoods.
The new agyeement
B a r t e rt r a n s a c t i o n sa r e
also
p r o v i d e sf o r a t r a d e valued a t $6,OOO,OCO.
permitted

D
&
g

-PORTC'GA L

of conclusion and d u r a t i o n

Trade andpa-yments agreements, December 31, 1949, v a l i d one y e a r ;

a u t o q a t i c a l l y renawed annuallyunless denounced.Lesttradeprotocol
Parch 21, 1956, v a l i d t o Decenber 31, 1956.
Pavments arraneenentg

"

Settlements are e f f e c t e d t h r o u g h t h e

EPU.

-46

PmT I1

AFPENDM

Tradearrangements

No import l i s t s a t t a c h e d t o l a s t p r o t o c o l , b u t P o r t u g a l u n d e r t o o k
a u t h o r i z e e x p o r t s of f i s h meal and coffee t o Greece.

nnte of conclusion

to

and d u r a t i o n

Tradeendpaymentsagreement
of May 19, 195b0 Renewed i n modified
formby a p r o t o c o ls i g n e d November 9, 1556. V r l i d t o December 31, 1957.
Tacitlyrenewablethereafter,unlesstsrminated
on three months' notice.

Pavmsnts arrangements
Payments e f f e c t e d . t h r o u g h c l e a r i n g a c c m n t s e
of $250,r100.

A swing c r e d i t Icargin

Commodity l i s t s withquotas.
TheNovember
1956 ProtocolProvides
f o r $7 m i l l i o n w o r t h of Rumania-n e x p o r t s a g a i n s t $6 m i l l i o n Greek exports,
Nost-favored-nation treatment accorded reciprocally regarding duty
assessments,taxes,etc.

SPAIN
,

Cata of conclusion and d u r a t i o n

"

TradeandpaymentsagreementFebruary
23, 195OY Replacedby new
tradeand paymentsagreement of i I a y 15, 1954. A d d i t i o n a l P r o t o c o l of
1 % ~15, 1955, v a l i d one year.5uccessively
renewed u n t i l May 15, 1958.
Pmmentsarrangements

C l e a r i n g a c c o u n t i n U S . d o l l a r s f o r E.?& of Greece with Spanish

I n s t i t u t e of' ForeignFxchange.
Swing limit @jOO,OOO
No i n t e r e s t .
Settlement on expiration by export of
goods. Any balance i n t h e
c l e a r i n g a c c o u n t may be t r a n s f e r r e d t o a c l e a r i n g a c c o u n t of a t h i r d
country with which SFain and Greece have
a papents agreement, i f t h a t
country agrees t o t h e t r a n s f e r .
Trade

"

arrangements

L a t e s t t r a d e l i s t s i n May 1955 Protocol include import

quotas f o r
i n d i v i d u a l items, on bofuh sides.Greeceapplies
same i m p o r tl i b e r a l i z a t i o n t o 5 p a i n a s t o EPU c o u n t r i e s .

- 47

PART I1
APFE P$DM

n,

"
Det,e
"
of"
conclusion
- a.nd duration_
TradeagreenentandpapentProtocolJune
25, 194.8annually,latestrenewalvalidto
June 30, 1957.

_ " "Paments

Renewed

arranflements

S e t t l e m e n t sa r ee f f e c t e dt h o u g ht h e
EPU. Paymentsagreementprov i d e s f c r a c l e a r i n g a c c c u n t i n Swedish crovns with Sveriges Riksbank;
no inte.=.est. Upon e x ? i r a t i o n of agreement,settlement
of balance i n
goGds, and a f t e r six months i n d o l l a r s ,
Trade

arrangement2

"
"

Latesttradoprotocol
no longer includes commodity quotas, on
account of t h e e x t e n s i o n o f f h e f r e e
l i s t of imports by both coun'3ries.
SWITZERLAND

Date of

conclusion and d u r a t i o n

Tradeandpaymentsagreement
L p r i l 15, 19.47. lu'ew paymentsagreement
May 1, 1952, v a l i d u n t i l denounced ( t h r e e months' n o t i c e ) .
Paments arrangements
S e t t l e m e n t sa r ee f f e c t e dt h r o u g ht h e
f o r a clearing account in Swiss francs for
National B ~ n k .

FPU. Payment agreementprovides

Bank of Greece and Swiss

Trade arrangements

"

None.

SYRIA
Date
"-~-

of conclusion and d u r a t i o n

The t r a d e agreement of June 2, 1952 i s t a c i t l y renewed f o r annual

periods. It i s notaccompanied by l i s t s . It p r o v i d e sf o rt h e
mutual
g r a n t i n g of the most-favored-nation clause,
f o r customs d u t i e s .

Payments a r e made i n pounds s t e r l i n g .

- /+8 -

PART 11
A P E BDlX

Date of conclusion and d u r a t i o n

On February 10, 1958, a specia.1tradeagreement was signedbetween
from January 1 and e x p i r i n g on
Greece and Tunisia, valid retroactively
December 31, 1955; t h i s c a n be extended by a t a c l t r e n e w a l f o r one y e a r
i f it i s not denounced t h r e e months p r i o r t o e x p i r a t i o n .
A F r o t o c o l of
sane date as above gives mutual most-favored-nation clause regarding
Lists havebeencompiled
showing quotas
& t i e s and c u s t o mf o r m a l i t i e s .
of GreekproductswhicharesuSject
t o r e s t r i c t i o n s i n Tunisia.Greece
will apply CEEC l i b e r a l i z a t i o n measures f o r T u n i s i a n p r o d u c t s .

Date of conclusion and &ration

PaymentsagreementApril
2, 1949. TradeagreenentJuly
21, 1949,
New t r a d e and p a p e n t s agreement November 7 , 1953: v a l i d one y e a r ,
t a c i t l y renewable annually if not denounced with two months' notice.
arrangements

P-ents

Settlements are effected through the

EPU.

Tradearrangamentt

No quotas e s t a b l i s h e df o rG r e e c e ' si m p o r t s .T u r k i s hq u o t a sf o r
Greek gpods include: cement ($3 m i l l i o n ) ,c o t t o ny a r n
and f s b r i c s ($2
million) and agricultural machinery
($1m i l l i o n j .

li.9 .S .R.

-Date

of conclusion and d w a t i . c n

Tradeandpaymentsagreement
3uly.23, '1953, v z l i d one year, exteciiable
by t a c i t agreement i f notdenounced.Lztestextens'ion
(August 23, 1955)
v a l i d t o aecember 31, 1956. Renewed by a new agreementsfgned on
January 19, 1957,
Papent.s

"

arran2ements

Reciprocal clearing accounts in terms

cf U.S. d o l l a r s i n B Pnk of
Greeceand S t a t e BPnk of t h e U.S.S.R.
S e t t l e m e n t s of o v e r d r a f t s i n U.S.
d o l l a r so rc o n v e r t i b l ac u r r e n c yo r
by n e g o t i a t i o n . 1957 agreementprov i d e s f o r a swing c r e d i t of $2.5 million.

- 4.9 Trade

"

PART I1
APENDIX

arrangements

C m o i l i t y l i s t s withquotas.
Under t h e 1957 agreementtheSoviet
Union'smainexportswere
t o bepigiron,steel,
oil, coal,timber,
fish,
pharmaceuticalproducts.
Greek e x p o r t si n c l u d e dt o b a c c o ,f r u i t s ,h i d e s ,
o l i v e o i l , andbauxite,
The 1957 agreenientincreasedthevalue
of t r a d e
between t h e two c o u n t r i e s t h r e e f o l d .
URUGUAY

"

Cake of c o n e h e i o n and d u r a t i o n
"Exchange bgreementflsigned on Kay 25, 1951. V a l i d f o r one year,
renewablefor one-year p r i o d s , L a t e s t e x t e n s i o n
up t o j.ky 12, 1958,
Pa-mentsarrangements
Reciprocalclearingaccountsintermsof
U.S. d o l l a r s h e l d b y t h e
two centralbanks.Eventualsettlementsubject
t o n e g o t i a t i o n .F o r e i g n
exchangec=.eatadbyimports
t o Uruguay w i l l be s e t a s i d e a t t h e lTruguayan
C e n t r a l Bank e x c l u s i v e l y t o pay f o r Uruguayan e x p o r t s t o G r e e c e .
Tredearrangements
Yay 195.4 agreement l i s t s $650,000 of TJruguayan q u o t a s f o r v a r i o u s
Greek p r o d u c t s( o l i v e sa n ds a f f r a n ,n a v a ls t o r e s ,l e a ft o b a c c o ,a l i v e
oil, etc.), andUruguay'sexpectedexports
t o Greece(rawkides,linseed
o i l , wool, g l y c e r i n ; or t h e whole$650,000 i n f r o z e n m e a t ) .

kccording t o t h e agreementof December 6, 1957, themost-favorednation clause has been mutually granted
f o r customs d u t i e s .

YEGOSLAVIA
Date of conclusion a&

"
"

duration

TradeandpaymentsagreementsignedApril
10, 1951. New tradeand
paymentsagreementFebruary
28, 1953. V a l i di n d e f i n i t e l yu n l - e s st h r e e
months'notice
t ot e r m i n a t e be given by e i t h e rp a r t y ,F i r s ts u p p l e mentary-protocol t o agreement of February 28, 1953, extended, was v a l i d
up t o Mwch 31, 1956. SecondSupplementalTradeProtocolsfgned
on
April 3, 1956, f o r a one-year period beginning April
1, 1956, was
extended t o March 31, 1958.

-Psvments

arrangements

Settlementsthroughanaccount
i n U.S, d o l l a r s h e l d
by theMatlonal
Bank of Yugoslavia i n t h e name of t h e Bank of Gresce. Since April
9, 1957,
10 per cent of Yugoslavia's earnings on current account is t r a n s f e r a b l e
v i t h i n t h e EPU,

5a

PART I1
APPEWIX

Tradearranpements

Lists of goods i n A p r i l 3, 1956 Protocolcontainannuelquotas

only
f o r thoseitems whose export i s r e s t r i c t e d i n e i t h e r c o u n t r y .
The Pugoslav
e x p o r t s l i s t e d were: sawn soft woods, e l e c t r o l y t i cc o p p e r ,r e f i n e dz i n c ,
arid sheep,beef,veal,
lamb,znd
mutton. The Greek
b e e fc a t t l e ,g o a t s
e x p o r t s l i s t e d were:lemons,
s i l k worm cocoons,andwalnut
t r e e 'trmksc
The imFort and export of all other products between the
two c o u n t r i e s
was t o b e f r e e of r e s t r i c t i o n s .