ECONOMY

2003 budget targets wage, per capita convergence

The government yesterday submitted the final 2003 budget to Parliament, asserting that the above-average growth rate projected next year will bring per capita income and wages closer to the average eurozone levels. Tax breaks scheduled to come into force next year together with an emphasis on agricultural and regional development also underscored the government’s determination to win back support after its poor showing in last month’s local and regional elections. Per capita income next year is expected to increase to 71 percent of the average eurozone figure and the average wage to 82 percent of the region’s level, Economy and Finance Minister Nikos Christodoulakis said. Key to this objective is the hefty increase in spending on the agriculture sector and regional development next year, with increases of 12.6 percent and 22 percent respectively. «The 2003 budget will help bridge the gap between Greece and the eurozone,» Christodoulakis said, with the optimism based on the 3.8 percent growth rate projected for next year, more than double the 1.8 percent forecast for the eurozone. Above-average growth, however, will be largely dependent on heavy public and private sector investment spending. The outlay for the public investment program is projected to increase by 12.9 percent, 6 percent higher than the rise in nominal gross domestic product and more than double this year’s level. Funds earmarked for regional projects under the program are due to increase by 59 percent and for agriculture by 35 percent. The private sector is expected to play a key role, with investment spending expected to rise by 9.3 percent and consumption by 3.1 percent. The government is determined to bring public debt down to eurozone levels following a hike in the debt-to-GDP ratio this year after Eurostat’s accounting revisions, Christodoulakis said. The privatization program is expected to generate close to 2 billion euros next year, equal to 2 percent of GDP, which should help reduce debt to 100 percent of national output. The list of companies slated for sell-off or alliances with strategic investors include gas utility DEPA and tourism asset management company ETA. A tight rein on spending is also expected to help reduce the debt mountain. Spending next year is forecast to increase by 6 percent against a 5.1 percent increase in revenues. The 2003 budget sees the unemployment rate dropping to 9.1 percent from an estimated 10 percent this year. The number of jobless in the second half of the year was the second highest among eurozone countries. Inflation, which has invariably overshot the eurozone average this year, is expected to slide to 2.5 percent next year from an official target of 3.3 percent this year. The budget deficit is projected at 0.9 percent of GDP.