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Greece: How long Europe's darling?

Looking for a convergence play in Europe? There's still one bet left: Greece, potentially the last of the euro-bubbles. Investors keen to gamble on Greece's entry to Emu may find their chance in the country's privatization programme.

Since the drachma's devaluation on March 14 this year, things have been looking good for Greece. The 14% drop in the value of the national currency and the end of the hard drachma policy was seen by many as proof of the Greek government's commitment to economic restructuring and joining the Emu project in 2001. Elias Mavrikos at Alpha Credit Bank, points to the tremendous growth of business on the Athens Stock Exchange since devaluation as a positive sign ­ from around Dr20 billion ($67 million) turnover a day to around Dr80 billion after March 14. "Investors believe that we are now serious about the economic discipline necessary to achieve entrance to Emu," he says. "We are very close to convergence, and for foreign investors this means lower risk."

Inside Greece and abroad, there is considerable optimism about Greece reaching its convergence targets on inflation, interest rates, budget deficit and external debt. Ben Ghalmi, European economist at Alliance Capital in the US, believes that "Greece joining Emu by 2001 is a credible timetable, three years is a long time and a lot can be accomplished.

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