RECOVERY OF INVESTMENT THROUGH A SELECTIVE CREDIT POLICY THAT HAS SUCCEEDED IN KEEPING REAL INTEREST RATES AT A VERY LOW LEVEL , AND BY COMPLETING THE SYSTEM OF A VERY VARIED RANGE OF SECTORAL AND REGIONAL AIDS .
THESE EFFORTS ARE CURRENTLY BEING MADE . HOWEVER , EXPORTS HAVE STAGNATED SO FAR AND INVESTMENT HAS SHOWN NO SIGNS OF PICKING UP . IN THE CIRCUMSTANCES , THE GROWTH RATE MIGHT APPROACH 1 % IN 1982 . MOREOVER , IT HAS PROVED IMPOSSIBLE TO COMPRESS LIQUIDITY BECAUSE THE PUBLIC SECTOR DEFICIT COULD HITHERTO NOT BE RESTRAINED AS FAR AS WAS HOPED . AS TO THE DRACHMA , IT HAS DEPRECIATED FURTHER , AS THE AUTHORITIES WERE SEEKING TO OFFSET THE EFFECT OF INFLATION DIFFERENTIALS ON GREECE'S COMPETITIVENESS .
THE CURRENT TIGHT POLICY SHOULD NEVERTHELESS NOT BE RELAXED ; FOR IT IS ESSENTIAL TO CONTROL INFLATION IF THE FINANCIAL CONDITIONS ARE TO BE ESTABLISHED TO ALLOW THE MAJOR INVESTMENT DRIVE REQUIRED TO TRANSFORM ECONOMIC STRUCTURES .
ECONOMIC POLICY WILL THUS HAVE TO MAKE USE OF ALL THE MEANS AVAILABLE TO ENSURE THAT NOMINAL TRENDS BEGIN TO SLOW DOWN IN 1983 . IN PARTICULAR , EFFORTS TO RESTRAIN THE RISE IN INCOMES WILL HAVE TO BE PURSUED , WHILE AVOIDING THAT THE INDEX-LINKING MECHANISM LEADS TO AN EXCESSIVE NARROWING OF THE OVERALL RANGE OF WAGES AND SALARIES . PRICE CONTROLS MUST ALSO CONTINUE SO AS TO PREVENT EXCESSIVE INCREASES . THE LIQUIDITY RATIO IN THE ECONOMY WILL HAVE TO BE CONSIDERABLY REDUCED BY BRINGING THE NET PUBLIC SECTOR BORROWING REQUIREMENT DOWN TO BELOW 10 % OF THE GROSS DOMESTIC PRODUCT VIA CUTS IN CURRENT EXPENDITURE AND INCREASES IN PUBLIC SERVICE CHARGES , BY TIGHTENING CREDIT CONTROLS AND BY ENCOURAGING STABLE SAVINGS . TO ACHIEVE THE LAST AIM , INTEREST RATES CAN NO LONGER BE KEPT AT AN ARTIFICIALLY LOW REAL LEVEL : MORE ACCOUNT WILL HAVE TO BE TAKEN OF MARKET CONDITIONS WHEN THEY ARE FIXED .
IN FRANCE , THE RECOVERY ENGENDERED BY THE UPTURN IN DEMAND IN 1981 HAS RESULTED IN A SHARP DETERIORATION OF THE TRADE BALANCE . THE EXTERNAL POSITION AS WELL AS THE FINANCIAL EQUILIBRIUM AND COMPETITIVE POSITION OF COMPANIES HAS BEEN DISTURBED . THE EXPANSION OF DOMESTIC CREDIT RESULTING FROM A GROWING PUBLIC DEFICIT AND FINANCIAL PROBLEMS AMONG FIRMS , HAS FUELLED INFLATION WHEN IT WAS DECLINING ELSEWHERE . THE EXCHANGE RATE FOR THE FRENCH FRANC WAS ALTERED IN OCTOBER 1981 AND IN JUNE 1982 .
THE REALIGNMENT WITHIN THE EUROPEAN MONETARY SYSTEM IN JUNE 1982 WAS ACCOMPANIED BY A RIGOROUS RECOVERY PROGRAMME . IT WAS IMMEDIATELY FOLLOWED BY TEMPORATY MEASURES TO BLOCK , DEFER OR LIMIT RISES IN PRICES AND INCOMES , IN AN ATTEMPT TO BREAK THE INFLATIONARY SPIRAL , AND BY THE ANNOUNCEMENT OF A VIGOROUS EFFORT TO CONTROL THE EXPANDING TREND OF THE PUBLIC DEFICIT . AT THE SAME TIME , THE MONEY SUPPLY GROWTH TARGETS FOR 1982 AND 1983 HAVE BEEN MODIFIED DOWNWARDS TO TAKE ACCOUNT OF THE EXPECTED CONTRACTION IN NOMINAL