longstanding credibility that the fed has acquired in its struggle to maintain price stability. in that, too, we are very different from them. 2. the dollar and the shekel the dollar, as you know, is a currency that many people in many countries are prepared to use as a means of payment and hold in order to maintain the value of their assets. the shekel, as you know, has not yet attained that status. it is true that because of the decline in the inflation rate we have stopped running after the dollar, but the habit of linking the prices of certain goods and services to the dollar has not yet disappeared. that provides the background for the fact that the balance - of - payments deficit has been part of the american scene for many years. in the last year, for example, it amounted to $ 400 billion – about 4. 5 percent of gdp. till now the americans had no real difficulty financing their import surplus. the world was willing to take the difference in dollars, which were invested in various assets in the us. foreign investment in us treasury bonds alone is nearly a massive $ 1, 300 billion. our situation is, of course, very different. although for us, too, a balance - of - payments deficit is a matter of routine, we cannot finance it with our currency. in other words, both we and the americans need dollars in order to cover the import surplus. the difference is that they can print them. we need to borrow them or, as has happened in recent years, benefit from the foreign investment in israel that has enabled us to maintain an import surplus without increasing our foreign debt, and even to accrue foreign - currency reserves and reduce our past foreign debt. naturally, all this was possible because our balance - of - payments deficit shrank significantly. this was not the case in the mid - 1990s, for example, when the deficit amounted to 6 percent of gdp – a rate that was taken as signalling an approaching crisis. the fears were so great that in deciding on its economic policy targets for 1997 the government placed the need to reduce the balance - of - payments deficit first, before growth, and certainly before reducing inflation ( the inflation target set for 1997 was 7 - 10 percent ). that balance - of - payments deficit had grown because fiscal and monetary policy was loose, there had been economic growth because of the rise in consumption and the standard of living, and that had brought both the balance - of - payments deficit and inflation

##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.