Bill aims at curbing ministries’ demands for more spending

The Ministry of Economy and Finance will submit a special bill designed to curb spending, after seeing budget outlays increase by 25 percent in the first quarter of the year. The government’s target is for spending to increase 6 percent in 2003. First-quarter figures have alarmed ministry officials and Finance Minister Nikos Christodoulakis himself. A meeting between Christodoulakis and his top aides yesterday finalized details of the spending bill. Today, they will meet again to discuss ways to cap spending close to the previously agreed targets. The bill makes changes in the auditing of expenditure. Henceforth, each ministry will be responsible for its own auditing, done now by teams of Finance Ministry officials. The Finance Ministry will be given powers to impose penalties on other ministries for overspending, or not spending the allocated funds for the specific purposes they were provided for. Second, it was decided that spending will be tied more closely to specific targets. If a certain project is not completed within the fiscal year, allocations to that ministry will be correspondingly reduced; there will be no more automatic increases for any kind of expenditure, including the most inelastic administrative outlays. Sources within the Finance Ministry say that civil servants are opposed to the new bill because they fear it will mean extra work for them. A previous Socialist finance minister, Alekos Papadopoulos, who held the post from 1993 to 1996, had also spoken of the need to review spending procedures but had failed to enact any reforms. Finance Ministry officials say that the excessive spending recorded in the first quarter of 2003 was an aberration that will slowly be corrected through the rest of the year. The fact remains, however, that the latest figures were a big blow to the government’s already tattered image of fiscal rectitude. Some extra spending, such as aid to farmers hurt by severe weather, was unavoidable but a one-off. Other outlays, including payments the State was forced to make to many civil servants as a result of court decisions, or outlays for projects related to the 2004 Athens Olympics, are beyond the government’s control. Olympic project expenditure, especially, has been spiraling upward and the government has been forced to resort to borrowing to meet it, since it cannot make any further cuts to projects. Already, during the first quarter, the government borrowed upward of 14 billion euros, almost half the amount forecast for the whole year. Besides runaway spending, the government also faces a problem finding adequate revenues. Some sources, such as the Athens Stock Exchange, have dried up because of slow business: In 1999, state revenues from stock market transactions came to 647 million euros. This year, the government will be lucky to get 60 million, which explains why it is pinning its hopes on some 90,000 enterprises agreeing to settle their accounts for the period 1993-98 by paying several million euros to avoid a full audit.

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