Borrowing set to reach 12 bln in Q1

The Greek government plans to borrow 12 billion euros ($14.2 billion) in the first quarter of 2006, about 1 billion less than in the same period of 2005, the head of the country’s debt agency (PDMA) said yesterday. Greece, the eurozone’s most indebted country, will spend 5 percent of its annual output next year to service its debt, or about 9.67 billion euros, based on official projections. «We will borrow about 12 billion euros in the first quarter from a total of around 29-30 billion for 2006,» the Public Debt Management Agency’s chief Spyros Papanicolaou told Reuters in a telephone interview. The government is counting on privatization proceeds of 1.65 billion euros next year to lower its public debt as a percentage of gross domestic product (GDP) to 104.8 from an estimated 107.9 percent in 2005. Servicing a 194.3-billion-euro debt mountain is challenging Greece’s budget at a time when the government is hard pressed to cut the deficit to below the European Union’s 3 percent limit to avoid sanctions. The government tapped the capital market for 13 billion euros in the first quarter of 2005, with this year’s total borrowing reaching 37 billion euros. «We plan to reopen a 30-year bond, raising 3-5 billion euros. We also plan a syndicated 10-year new benchmark bond issue, to raise about 5 billion euros,» Papanicolaou said, without providing further details about when. PDMA has already announced a three-year benchmark bond issue in March 14 and a T-bill issue for January 3. The PDMA chief said he expects to raise 2-2.5 billion euros from the three-year bond and another 500 million euros from T-bills. The government borrowed more than it planned this year, topping its original 33- to 35-billion-euro target, to plug a higher-than-expected budget hole, estimated at 4.3 percent of GDP. «The higher borrowing in 2005 resulted from larger (than estimated) deficits,» Papanicolaou said. The government is targeting a deficit of 2.6 percent in 2006, through belt-tightening and a clampdown on tax evasion to shore up revenues. It projects economic growth picking up to a 3.8 percent annual pace from 3.6 percent in 2005.