ECONOMY

Alogoskoufis is undaunted by hidden imbalances

The government yesterday reiterated its commitment to putting the economy on a healthier footing after sailing through the rough waters of fiscal imbalances and hidden debts which it claims to have inherited. «I have to warn that the 2004 budget will not be executed as planned, it will be difficult to hold the deficit below 3 percent of gross domestic product… (But) as of 2005, we shall lay the basis for healthy, honest and trustworthy budgets, and reliable stability and growth programs,» Economy and Finance Minister Giorgos Alogoskoufis told Parliament in a special debate on the state of the economy. Alogoskoufis dismissed the main opposition PASOK party’s claim that Greece had come under the watchful eye of the European Commission for exceeding the 3 percent limit of budget deficit due to the government’s voluntary change in public accounting rules. «We did not change the accounting rules. The divergence is due to a fictitious overstatement of last year’s budget revenues and the concealment of public consumption expenses,» Alogoskoufis said, noting that the government’s recent evaluation of the economy had been carried out in collaboration with the European Union’s competent agencies and had confirmed the unreliability of past years’ budgets. Eurostat last week revised the 2003 Greek general government deficit from 1.7 percent to 3.2 percent of GDP. Earlier in the debate, PASOK leader George Papandreou said the difference was due to the change in accounting rules, and accused the government of consciously placing the Greek economy under trusteeship, with unfavorable consequences for all economic indicators. Alogoskoufis claimed the divergence of public deficits from initial budget entries was in excess of 11.5 billion euros in the last four years, and submitted Bank of Greece data indicating that public debt rose much faster than was justified by budget deficits. He said there were also concealed debts, mainly of hospitals to their suppliers (2 billion euros), transport utilities which had borrowed under state guarantees, and defense procurements. He said taking stock of such debts was in progress and results would soon be available. Alogoskoufis predicted that the government’s «outward-looking growth policy» would create the resources necessary to turn the economy round. «The country has a large development potential and by improving competitiveness, we shall infuse new dynamism in sectors where Greece lags despite its comparative advantages.»