##ness of job matching mechanisms ), the performance of the greek labour market has not yet materially improved. this year ’ s national action plan for employment is a well - articulated approach intended to provide an overview of the government ’ s initiatives and plans in this area. but more stress needs to be placed on improving the quality and job - relevance of vocational training. the government ’ s privatisation and flotation programme has been steadily implemented. this has contributed significantly to debt reduction and enhanced competition in the banking system. but privatisation needs to expand into other areas, including key economic sectors that remain dominated by public enterprises. tax reform is also needed to alleviate the tax burden, particularly, although not exclusively, on wage earners and to bring the tax structure into line with that in the euro area, thereby preventing the movement of capital and labour to lower - taxed areas. in concluding, i would note that the achievements to date are impressive and have paved the way for greece ’ s forthcoming participation in the euro area. by meeting the challenges of completing the necessary budgetary consolidation and stepping up action across the broad spectrum of structural reforms, greece will not only be able to join the euro area in a strong competitive position, but will also reap the full benefits from participation in emu.

mr garganas gives a speech on integrating greece into the euro area and the challenges ahead speech given by mr nicholas c garganas, deputy governor of the bank of greece, at the “ athens summit 1999 ” on 18 september 1999. * * * the adoption of the euro as a common currency by a first group of eleven european union member states on 1 january 1999 was rightly described as an historic event since the move to the final stage of economic and monetary union indeed marks a decisive step towards full economic and political integration between the countries participating in this endeavour. the vigorous and credible implementation by greece of policies aimed at achieving a high degree of sustainable economic convergence and meeting the terms of the maastricht treaty for emu participation have yielded concrete results, thus placing greece directly on the road to joining the euro area by the target date of 1 january 2001. over the past few years, convergence towards price stability has been impressive. the annual rate of inflation in august was 2 %. great progress has also been achieved regarding the general government budgetary position. in 1998, the deficit stood at 2. 5 % of gdp, and is expected to fall further ( to just over 1. 5 % ) this year, continuing the downward path of the debt – to – gdp ratio, which currently stands at 105 %. the gradual reduction in budget deficits, together with the entry of the drachma into the exchange rate mechanism, has led to an appreciation of the drachma ( first against the ecu and this year against the euro ), and lower long - term interest rates. in the first half of this month, the ten - year government bond spread versus germany was around 163 basis points, compared with 196 basis points in march 1999 and 425 basis points in september 1998. the remarkable nominal convergence achieved by greece indicates that its objective of meeting the maastricht criteria by early 2000 is now becoming a reality. although it is widely anticipated that greece will be admitted into the euro area by june next year so that it can adopt the single currency on 1 january 2001, we should not allow this achievement to dim our view of what remains to be done. as i see it, greece faces two broad sets of challenges. first, in the remainder of 1999 and in 2000, macroeconomic policy has to remain firmly focused on keeping the emu process on track and on securing the conditions that will make for a smooth transition and positive performance upon entry. from this point of view, the main