Inflation estimate raised for 2009

Minister warns there is no easy way out of crisis

Prime Minister Costas Karamanlis (top) keeps a close eye on National Economy and Finance Minister Giorgos Alogoskoufis, who has warned that there are no easy solutions to get out of the global financial and credit crisis. Alogoskoufis also revised higher Greece’s anticipated inflation figure for 2009 to 3.5 percent. Meanwhile, the European Commission gave the green light to Greece’s 28-billion-euro bank rescue plan, which aims at providing lenders with a liquidity and capital boost.

National Economy and Finance Minister Giorgos Alogoskoufis revised upward Greece’s inflation forecast for next year yesterday, warning that there are no easy solutions to the global financial crisis.

Alogoskoufis said that the headline consumer price index in 2009 is seen as hitting 3.5 percent in 2009, up from a previous estimate of 3.2 percent, as stated in the budget draft bill.

Consumer price hikes in Greece hit 10-year highs earlier this year on the back of soaring oil prices, which lifted the index to an annual pace of almost 5 percent.

“We know what the problems are and are doing whatever is possible to solve them but we also know that there are no easy solutions,” the minister told Parliament.

The new target is in line with the European Commission report released earlier this month, which sees economic growth next year slowing to 2.5 percent year-on-year, from a targeted 3.1 percent in 2008.

Greece’s Finance Ministry sees gross domestic product expanding by 3 percent in 2008.

As a means of helping to fight the impact of the financial and credit crisis, the conservative government has announced plans to provide lenders with a 28-billion-euro package to help shore up liquidity and capital.

The European Commission gave the green light to the program late yesterday, describing it as a suitable means to help the economy avoid any serious shocks.

“The Commission has concluded that the plan consists of a suitable relative and necessary means to maintain confidence in the solvency of Greek banks and to give a new push to interbank lending,” it said in a statement.

Opposition parties have criticized the plan, saying that the state money will not reach those who most need it, namely small and medium-sized businesses.

The European Union’s executive body, however, said it sees the plan providing funds that will be used for mortgage purposes and small to medium-sized businesses under competitive terms.

Lawmakers are likely to vote on the bank plan today.