Athens / Brussels, 14/01/2000 (Agence Europe) - Friday evening Community circles were expecting the convening (for Saturday) of the EU's Economic and Financial Committee to discuss the re-evaluation of the Greek drachma in relation to the euro. Senior Greek officials, members of the Committee, were already in Brussels Friday. A Community decision is necessary as Greece is part of the "SME-2" exchange rate system and any change to the central rate has to be decided by common agreement.
The procedure is as follows: the Greek members of the Economic and Financial Committee call on the latter's chair to convene the Committee to discuss the drachma's central rate. The chair convenes the Committee, which expresses its opinion on the operation and on the new rate being envisaged. The decision is then taken by common agreement by the Finance Ministers and by he European Central Bank (ECB) regarding the Euro Zone, and, regarding countries not members of the Euro Zone, by the Finance Ministers of governors of the respective central banks. The European Commission is involved in the process. The countries of the EU neither part of the Euro Zone nor SME-2 (the United Kingdom and Sweden) do not take part in the vote. The decision should be followed by an immediate fall in interest rates in Greece.
In Athens, Greek Economy and Finance Minister Yannos Papantoniou confirmed the government's intention of reassessing the central rate of the drachma, while stressing that the decision had to be taken in the framework of the Community procedure. This initiative is made possible by the current strength of the Greek currency and is, according to financial circles, situated in the framework of Greece's march towards participation in the euro, for which the Greek authorities have confirmed the scheduled timetable, which is: introduction of the request to join the final stage of Economic and Monetary Union on 12 or 13 March, once it has been observed, in February, that Greece has respected the "inflation criteria" (the other Maastricht criteria have already been respected); decision at the level of Heads of Government at the 19/20 June Summit near Oporto (Portugal). The authorities expect strong economic growth, low interest rates and a reduced inflation this year. According to Greek sources, the new parity would be situated at 343 drachma for one euro. The current central rate is 353.109 drachma to the euro, whereas the market rate revolves around 331 dr per euro. By setting the central rate at between 340 and 345 drachmae, the "legal" rate would approach the real rate.
According to the latest information, the Economic and Financial Committee (body replacing the former Monetary Committee) was already in session Friday evening.