EU scrutinizes budget

2006 state finances may be headed for last-minute adjustment

The European Commission will pass judgement on Greece's attempt to securitize 2 billion euros of tax debt by the end of the year, it said yesterday, in a decision that could force the government into a last-minute overhaul of the 2006 budget.

Finance Minister Giorgos Alogoskoufis said that Greece has a backup plan if the Commission forbids the securitization and quipped that Eurostat, the European Union's statistical service, should be more clear about accounting rules.

It is not possible for the drawing up of a national budget to depend on the changes Eurostat decides upon from time to time, Alogoskoufis said from Brussels, where he is attending a meeting of EU finance ministers (ECOFIN).

The 2 billion euros in question has become a contentious issue for the Finance Ministry, as a negative ruling could throw a spanner into the government's economic policy.

EU Economic and Monetary Affairs Commissioner Joaquin Almunia has stressed all along that budget deficits should be cut with the help of structural reforms and not one-off measures.

Yesterday he said that a decision on Greece's securitized revenue would not be made until the end of the year, as the EU requires more information on the 2006 budget. This delay could be seen as a softened stance from Almunia, given local speculation that the Commission will flatly say «no» to the measure.

Greece's budget deficit and high public debt could also hurt its international credit rating, according to credit rating agency Standard and Poor's (S&P).

S&P said yesterday that additional measures were needed to cut the deficit to below 3 percent of GDP and warned that if state debt moved higher, its rating of Greece would come under new pressure.