Political appeal for securitization option

The government will lobby European Union finance ministers should the EU Commission turn down its plans to securitize uncollected tax debt in order to shrink its 2006 budget deficit, Economy and Finance Minister Giorgos Alogoskoufis said yesterday. «The further adjustment of the deficit in 2006 will take place exclusively through structural measures and will be fully compliant with Ecofin’s recommendation in March 2005,» he told reporters. «Every effort will be made to avoid differences of interpretation as regards the recommendation by the European Commission. If, however, differences do arise, these will be resolved at the council of finance ministers, which made the recommendation,» he said. The government is awaiting Eurostat’s green light to proceed with securitization of 3.8 billion euros in tax debt as supplementary measures this and next year to reduce its fiscal gap to below the EU’s 3 percent limit by 2006 from 6.6 percent of GDP last year to avoid sanctions. But EU Monetary Affairs Commissioner Joaquin Almunia has expressed reservations on grounds the planned securitization is a one-off, temporary measure. He urged Athens to adopt structural measures of a more permanent nature to cut the deficit. «Securitizations are one-off measures; this kind of one-off measures… It is up to Eurostat to decide,» Almunia told Greece’s Parliament on Thursday. Based on its draft 2006 budget, the government will rely on securitization proceeds amounting to about 1 percent of GDP next year to lower its fiscal shortfall to 2.8 percent. (Reuters)