Greece’s public deficit seems likely to significantly exceed the figures for previous fiscal years and the initial projections for 2004, according to the revision of public finances which the government has conducted in the last few months and of which it has already notified the European Commission, sources say. The public deficit for previous years is being readjusted to more than 3.7 percent of gross domestic product (GDP), to 4.6 percent for 2003 – more than three times the projection of the previous PASOK government – and to 5.3 percent for this year. In July, EU finance ministers approved an excessive deficit warning against Greece, giving it a November deadline to take steps to bring its budget deficit below the EU’s 3 percent limit by 2005. According to the sources, the government will commit itself to limiting the deficit to 2.8 percent of GDP in the 2005 budget, as the rate of increase in public expenses is projected to slow down, largely because of the completion of Olympic projects. The reality of the fiscal situation is seen as quite different from what has been made public so far, and is considered likely to lead to a downgrade of Greece’s credit rating. According to reports, credit rating agency Standard & Poor’s may issue a report downgrading Greek bonds. Meanwhile, the General Accounting Office is said to be receiving demands for up to 50 percent rises in ministry budgets for 2005. In a circular, the Finance Ministry had asked for the spending budget increases to be limited to 3 percent. The ministries of Defense, Health and Education, whose combined total for 2004 was more than 13 billion euros, are reported to be way beyond limit and their demands are seen as severely testing the constraints of the budget. Other ministries are still said not to have submitted their proposals, despite the initial June 30 deadline. The Economy and Finance Ministry is evidently trying to tread a fine line between the two contradictory elements of fiscal constraints, on one hand, and ministers’ excessive requirements, on the other. Economy and Finance Minister Giorgos Alogoskoufis is said to be planning to start contacts with colleagues in about two weeks’ time, with a view to formulating the first draft of the budget, which will be tabled in Parliament in early October. According to a Reuters report from Brussels, Dutch Finance Minister Gerrit Zalm said yesterday he was certain that Greece, whose 2003 budget deficit topped European Union limits, was headed for good economic times. «Good times are now coming for Greece because all these expenditures have been done, so the budget deficit will be soon under control. I am sure of that,» he told the European Parliament’s Economic and Monetary Affairs Committee.