Gov’t sees smooth course for public debt to year end

The government said yesterday it was optimistic that public debt would meet the 2003 budget target of 150.4 billion euros, or 100.2 percent of gross domestic product (GDP), despite ending at 155.5 billion, or 103.6 percent of GDP, on June 30. Citing data from the General Accounting Office, the Finance Ministry noted in a statement that public debt had fallen from 105.5 percent of GDP on December 31, 2002, and that the slide would accelerate due a number of favorable factors: First, the government has already implemented the greater part of its annual borrowing program, having sought increased liquidity to maintain the competitiveness of Greek benchmark bonds. Further, it expects to net a total of about 2.60 billion euros (about half the amount required to meet the target) from the partial privatization of public organizations in the current year, and from higher European Union investment subsidy inflows that will make up for a shortfall in the first half. The European Union’s long-term fiscal Stability Program has set a target of public debt at 60 percent of GDP. According to a recent study by the Bank of Greece, attainment of the target is possible in six to seven years on condition that this year’s target is achieved, that GDP at current prices grows at a rate of 6 percent a year and that the government’s average borrowing rate is 4.5 percent.