Securitization, a less certain revenue source

The government’s hopes of securing a major revenue breather for this year through the securitization of old tax debts seem to be hanging in the balance. Whereas to date the plan was considered certain to be given the stamp of approval by Eurostat, the European Union’s statistics service, a spokeswoman for Economic and Monetary Affairs Commissioner Joaquin Almunia said yesterday that Eurostat intended to ask for more details before deciding. The plan concerns overdue tax debts of 1.5 billion euros – or 1 percent of gross domestic product (GDP) – against which the government has arranged to take out a loan. It is targeting a lowering of the public deficit from 6.6 percent of GDP in 2004 to 3.6 percent this year. If Eurostat does not approve the scheme, the shortfall will throw the budget off course and send the government looking for other (likely politically unpopular) sources of revenue. Whereas government spokesman Theodoros Roussopoulos said on Tuesday that «the 2005 securitization has been approved,» yesterday Amelia Torres, Almunia’s spokeswoman, said Eurostat is expected to decide by the end of the year. She said the question was whether the securitization of old debts was compatible with European accounting standards. Almunia himself has already indicated he is against the securitization of a further 2 billion euros in old tax debts in the 2006 budget, saying that the Greek government must look for more permanent sources of revenue. Torres clarified that no decision has been made for either 2005 or 2006. Meanwhile, Economy and Finance Minister Giorgos Alogoskoufis met with representatives of large institutional investors in New York yesterday in an effort to promote reforms in the Greek economy and the privatization program, which is hoped to yield 1.6 billion euros in revenue next year – although such income can only go toward debt servicing. Alogoskoufis also met with senior editorial staff from Forbes magazine, was interviewed by the CBS Market Watch TV channel and was hosted at a dinner by the New York Stock Exchange. Today, he is due to speak at a conference on investment opportunities in Greece and the country’s role in the development of Southeastern Europe.

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