Extended global turmoil could affect Greek privatization plans

Greece’s privatizations program, now approaching the final stretch towards implementation, could be staged under drastically different market conditions if the current turmoil and instability witnessed in international markets carries on.

Though still too early for any safe predictions, the uncertainty of foreign stock exchanges could greatly impact the international plans of global investors, including in Greece.

Also, the current turmoil could also end up reducing the bourse value of the Greek State’s stakes in the main power utility PPC as well as the Athens and Thessaloniki water supply and sewerage utilities, EYDAP and EYATH, respectively. The state’s stakes in these utilities have been transferred to TAIPED, Greece’s privatization fund, as part of the lead-up to the privatizations.

Market experts have noted that investors prefer to place their money in low-to-zero risk countries during times of uncertainty. If the global economy enters a new period no longer offering low interest rates, a weaker euro and low oil prices, as was the case between 2015 and 2017, then the Greek economy could be negatively impacted.

It remains to be seen how such conditions could influence the plans of international investors in Greece.

Given the current market conditions in Greece, offering low asset values, and high unemployment amid the educated classes, which is prompting lower labor costs, investors should be eyeing Greece. However, a series of age-old factors, such as the country’s notorious level of bureaucracy and slow legal system, as well as newer factors, including the government’s negative impact on entrepreneurship, marked by high taxation levels, appears to be keeping investors away.

If the current turmoil in foreign markets ends up not being ephemeral, then a Plan B may need to be established for Greece’s privatizations program.