What Papademos' priorities are

Settling the new loan agreement agreed by the EU Council on October 26 and PSI management will be the first priorities of the trustee PM, Lucas Papademos, who has already gone ahead with the creation of a strong staff.

Once sworn in, the process of programmatic statements is complete and the vote of confidence is received, Mr. Papademos is expected to devote himself to the issue of the economy, namely the specification and implementation of the decisions taken on October 26th on the Greek haircut bonds by 50%.

As shown by the statement issued after the meeting between Messrs. Papandreou, Samaras and Karatzaferis, under Mr. Karolos Papoulias, “the work of the new government is the implementation of the decisions of the 26th of October EU Summit decisions, and the application of economic policies related to these decisions”.

With accelerated procedures and after Mr. Papademos is sworn in, he is called upon to ratify the new loan agreement and any accompanying measures.

Secondly, he will have to manage the PSI, which has two parts, one concerning the international and the domestic arm of participation in the restructuring of private debt.

The handling of foreign PSI seems easier than the handling of the completion of the entire debt restructuring held by Greek banks and the state’s pension funds.

That is because Mr. Papademos will be required to find the right balance in order neither to destabilize the banking sector  nor promote beneficial measures for banks. Politically, PSI management will be the hardest task set forth for the new PM.

Mr. Papademos might want to draft a new redesign of actions in order to curb deficits in view of the submission of the new budget

What should not escape Mr. Papademos’ attention is that even though there are new variations on the fundamentals of the budget, the new PM will have the possibility of corrective movements. This is because the expected cut of Greek government bonds is 50%, and as such will result in a significant reduction as a result of the cancellation of interest payments required for the country to pay in the coming years.

Unconfirmed reports that Mr. Papademos is willing to replace the heads of State-owned companies and pension funds still exist nevertheless.

What he asked of citizens

In his first statements, Mr. Papademos described the Greek economy situation and expressed his belief that people would overcome problems if they try to do so with unity, wisdom and consensus.

“The Greek economy is still facing problems. Greece is at a crossroads. The choices that will be made for its progress will not be easy”, warned the new PM and added: “But I am certain that the problems will be solved”.

Mr. Papademos stressed that he is “ convinced that the country’s participation in the Eurozone is a prerequisite of fiscal stability”, urging all Greeks “to be optimistic about the final result if we are united, determined and closely work together”.