Public borrowing certain to rise in 2004, but extent is uncertain

Greece’s 2005 borrowing to cover maturing debt will remain close to this year’s level but overall borrowing is not yet clear, a senior official said yesterday. «Our obligations for expiring bond and T-bill payments in 2005 will be around the figures of the current year, which came in at around 32 billion euros (for bond repayments alone),» said the Finance Ministry official, who declined to be named. Surging costs for the Athens Olympics pushed Greece’s 2004 total borrowing above an initial target of 30 billion euros to somewhere between 36 billion and 40 billion euros, Finance Ministry officials have said. «The 32-billion-euro figure does not represent the total borrowing for 2005, as we still do not know what other state obligations could bump up the total figure, and furthermore we do not yet know the impact of inflows from privatizations,» said the official. The official borrowing target for 2005 is expected in early October with the draft budget for next year. Greece faces demands from the European Commission to take steps by November to bring its budget deficit below the European Union limit of 3.0 percent of GDP by 2005. There have been regular revisions of the 2003 and 2004 deficits since March, when the conservative government ordered a fiscal inventory after taking power from the Socialists. The 2004 deficit is currently expected to come in at around 5 percent. The country’s public debt is proportionately one of the highest in the eurozone, and recent Greek press reports citing high-level government sources suggest it might reach 110 percent of gross domestic product in 2004. «Around 45 percent of the repayments will take place in the first three months of the year, and 80 percent in the first six months,» the official added. (Reuters)

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