Economy and Finance Minister Giorgos Alogoskoufis yesterday appeared optimistic about the economy’s short-term prospects. Alogoskoufis told reporters that there are «sufficient indications» that GDP growth in the second quarter of 2005 reached 3.5 percent, in line with the government’s revised predictions. He mentioned data on retail sales and unemployment in support of this view and added that Greece continued to have one of the higher growth rates among EU member states. What the minister failed to touch upon is the paradox of a country with a high growth rate and, simultaneously, huge budget deficits. But, then, Alogoskoufis failed to say anything about how the 2005 budget is being implemented. It is known, however, that revenues remain a sore point, while problems with mounting spending have also appeared. Alogoskoufis repeated that the government aims to bring the budget deficit below 3 percent of GDP in 2006 and, when asked how, said the details will be revealed when he submits the draft 2006 budget to Parliament in October. The government has added the fight against tax evasion, especially the non-payment of value-added tax (VAT) and illegal trading, especially in oil products, to its list of economic policy priorities, Alogoskoufis said. Asked about the reports on the budget and the tax collection system submitted to him by a team of International Monetary Fund (IMF) experts, Alogoskoufis said that he and his advisers are studying them carefully and that his team was aware of most of the systemic weaknesses noted in them. The finance minister said that the European Commission did not appear to raise objections to government aid for the OTE employees’ fund, which is going to use a lot of money on a generous retirement package designed to rid the company of some 6,000 highly paid employees. On another issue regarding the Commission, Alogoskoufis said he is still waiting for its view on his proposal to exempt a homeowner’s primary residence from the VAT tax on new buildings that is to imposed from January 1, 2006. He added that the draft bill on changes in property taxation will be published by the end of the month. Asked whether the government would revive the measure whereby taxpayers submitted expenses on a variety of items to earn an income tax deduction, Alogoskoufis said that this measure was considered too bureaucratic by the team of IMF advisers. The minister also talked about the securitization of revenues from previous years planned by the Economy Ministry, saying that it would be useful and adding that Portugal had done it, too. Asked to respond to remarks by Vangelis Meimarakis, the general secretary of the ruling New Democracy party, who had said that troubled state airline Olympic Airlines would either be sold to a bidder or shut down, Alogoskoufis said that talks with two bidders are at a critical point and refrained from further comment.