ECONOMY

Fiscal, revenue goals hit by crisis

The Finance Ministry said yesterday the fallout from the September 11 events will have a negative impact on both fiscal and revenue targets for this year. Deputy Finance Minister Giorgos Floridis said the projected budget surplus, amounting to 0.5 percent of gross domestic product (GDP) this year, will shrink significantly while revenues are expected to decline marginally. We are currently reassessing the fiscal surplus goal but it is expected to be less than projected, he told reporters. He said that a negligible budget surplus would still be recorded this year, without, however, specifying any figure. Analysts said that a budget surplus is essential to ensure that Greece achieves real convergence with other eurozone member states. The feat would also be the first budget surplus in the country’s postwar history after decades of deficits. The deputy minister said next year’s target of a budget surplus equivalent to 1.3 percent of GDP would also come under review. Floridis also cautioned on revenue growth for the overall year, noting that as a result of the recent events in the USA, revenues will be slightly lower than targeted. He said the government will aim to offset this decline and yet achieve a budget surplus by slashing consumer expenditure while keeping social spending intact. The latest revision in macroeconomic objectives came after Economy and Finance Minister Nikos Christodoulakis amended projected growth rates for this year and 2002 to more realistic levels in response to the global downturn. He is due to present the 2002 budget to Parliament on November 21. Floridis also announced a series of measures to strengthen the effectiveness of fiscal policy, the only tool left to Greece after it acceded to the eurozone on January 1 this year. These include rationalizing expenditure with each and every item assessed on its merits and objective, implementing a fairer wage scale, monitoring European Union structural funds, computerizing public services and the public accounting system and managing state assets more efficiently. Unveiling regular nine-month budgetary figures, the deputy minister said that revenues in the period rose by 8.9 percent against a targeted 7.9 percent. He attributed the 0.7-percent surplus resulting from this gain to the faster settlement of individual tax returns. Primary spending in the nine-month period slowed down to 7.2 percent against the budgetary goal of 7.5 percent as the State reined in consumer expenditure. The government’s success in restructuring external debt amid a background of falling interest rates also kept debt servicing costs down. Floridis said the State has already met this year’s goal of trimming 2 percent off interest payments. He said the public investment program continues to be plagued by late payments of EU structural funds due to the changes in procedures relating to EU-backed projects.