ECONOMY

Tighter belt in 2006

Greece will rely on tighter public spending and revenue growth above 7 percent next year to bring its budget deficit below the European Union’s 3 percent cap, the country’s deputy finance minister said yesterday. «In 2006 public spending will be curtailed further. The target for primary expenditures and interest payments will be for an increase below 5 percent,» Deputy Finance Minister Petros Doukas told Reuters, based on preliminary 2006 budget plans. Greece wants to shrink its fiscal gap to 3.5 percent of gross domestic product (GDP) this year and to 2.8 percent in 2006 from 6.1 percent last year. But weak revenue growth so far has forced the center-right government to renege on election campaign promises and hike VAT tax rates by one percentage point in March to shore up public finances. Asked whether the government is considering additional tax measures this year to cover the emerging revenue shortfall, the minister said, «There is no such plan.» Doukas also said that Greece’s total borrowing this year will likely reach 34 billion euros ($41.5 billion). «Our total 2005 borrowing will be around 34 billion euros, an amount that is close to the government’s initial target (of 32-33 billion).» (Reuters)