ECONOMY

Businessmen skeptical over PASOK’s ‘social package’

With the exception of the reduction in import taxes for vehicles, which were universally applauded, the measures announced by the government were greeted with skepticism by business representatives and with predictable criticism from opposition parties. A large part of the government’s resolutions focused on farmers and countryside development. Evangelos Basiakos, agriculture spokesman for the conservative opposition New Democracy said that the government had refused to enact many of the same measures just a month ago. «Being in a state of panic, they lifted some of the measures contained in our own program,» he said. Officials from farmers’ cooperatives had mixed reactions, depending on whether they were supportive of the government, New Democracy, or the left-wing opposition. Agriculture Minister Giorgos Drys admitted yesterday that the government had not made estimates of the impact of the measures on production costs by product. This will be done «in the following days,» he said. Odysseas Kyriakopoulos, chairman and executive president of the Federation of Greek Industries, responded to the government’s measures by declaring that «this is not the time to outdo each other on promises.» Drakoulis Fountoukakos, president of the Athens Chamber of Commerce and Industry, said that while favoring measures «to boost the weakest social classes,» he believed that this «should take place through the redistribution of government spending and not by raising the budget deficit and the public debt… a development which will undermine our country’s position in a unified and more competitive Europe.» Fountoukakos, as well as representatives of merchants’ associations, noted that this generous package of measures, set to cost 2.36 billion euros, according to the government, did very little for small and medium-sized enterprises. Retailers’ representatives expressed their fears that the cost of the measures will be covered by higher corporate taxes, something the government has denied. A study published yesterday by Alpha Bank claimed that the budget deficit will increase significantly in 2003 and even more so in 2004. The original figures for the 2003 budget deficit – published after the European Commission had obliged the Greek government to show its hidden expenses and shattered the illusion of a surplus – said it would be equal to 0.9 percent of Greece’s gross domestic product (GDP). Alpha Bank, whose study was compiled ahead of the government’s announcement of the measures, predicted that there would be a minimum of 950 million euros in expenditure overruns, which will raise the actual deficit to 1.6 percent of GDP. In 2004, the situation will be worse. Initial estimates called for a deficit equal to 0.4 percent of GDP but had been revised upward, to 1.1 percent, to take account of the effect of government’s tax reforms. According to the Alpha Bank study, the actual 2004 budget deficit will be equal to 2.4 percent of GDP. Already, during the first seven months of the year, the deficit (7.2 billion euros) has surpassed the target for the whole of 2003 (5.3 billion).