ECONOMY

Economy minister laments bleak state of public finances

The main topic of discussion at yesterday’s Cabinet meeting was a report on the state of the economy by Economy and Finance Minister Giorgos Alogoskoufis. Alogoskoufis provided his colleagues with an interim report on the so-called re-examination of public finances that conservative New Democracy had promised while in opposition. His main points were that the previous Socialist government was profligate, wasting public money and leaving behind increased deficits and that it had overstated the country’s growth in 2003. He also pointed to the persistent high jobless rate and the failure of the previous government to move quickly to ensure receipt of the significant funds at Greece’s disposal under the European Union’s third Community Support Framework (CSFIII) program. Specifically, Alogoskoufis said: «I asked the Economy and Finance Ministry to make a realistic estimate (of economic growth). For 2003, the estimate was that economic growth was 4.2 percent, not 5 percent as the opposition says (Actually, the opposition claims a growth rate of 4.7 percent). The estimate for 2004 is smaller, 3.7 percent.» «Unfortunately,» Alogoskoufis continued, «these numbers are not the result of the economy’s competitiveness and outward look.» They are, he explained, almost exclusively the result of growth in the construction sector thanks to Olympics-related projects. Alogoskoufis also mentioned that the average jobless rate in 2003 was 9.5 percent, higher than the EU average, and that one in five Greeks live below the official poverty line. The impact of the State’s welfare policies has been minimal, he added. Scoring political points Alogoskoufis’s report will serve as the basis for the government’s argument in a parliamentary debate on the state of the economy, likely to be held early next month. Unusually, it was Prime Minister Costas Karamanlis who requested this extraordinary debate last week in a letter to Parliament speaker Anna Psarouda-Benaki. Usually, it is the opposition that calls for a debate on the state of the economy in order to score easy political points off the government. Karamanlis’s action was scorned by the opposition Panhellenic Socialist Movement (PASOK), which governed without interruption from October 1993 until last month. «New Democracy, in government, continues to act like an irresponsible opposition party regarding the economy, with baseless assertions, defamatory attacks and transparent petty political goals,» said PASOK’s statement. «The prime minister and the New Democracy party are still searching in vain for alibis and excuses not to follow up on their extravagant pre-election commitments, whose cost had been estimated at over 10.5 billion euros, and to go through with spending cuts and austerity policies,» it added. Further statements by PASOK MP Theodoros Pangalos, appointed party coordinator in the parliamentary committee on the economy, showed that PASOK will robustly defend its economic record, while accusing New Democracy of presenting a distorted picture. The Socialists will also needle Karamanlis to state why, if the economy was in such a dire state, he had promised so much ahead of the election. The deficit figures, especially, will provide the grounds for New Democracy to base its attack on. It is likely, however, that PASOK strongly objects to the revised growth figure. It will also accuse the government of undermining its own effort to collect revenue by declaring before the election that it would abolish the financial crimes squad, which it called a partisan body bent on harassing businesses.