ECONOMY

Borrowing requirements for Q3 will reach 4.5 bln euros

The Greek government plans to borrow 4.5 billion euros in the third quarter of 2006 – a billion less than in the same period last year – as it struggles to reduce its mountain of debt, the head of the debt agency said yesterday. Greece is trying to cut public debt to 104.8 percent of GDP from an estimated 107.9 percent last year – one of the highest in the eurozone as a percentage of GDP. At the same time, it is scrambling to reduce its budget deficit to below a European Union-mandated cap of 3 percent of gross domestic product this year or else face EU sanctions. Since coming to office two years ago, the center-right government has been trying to cut both debt and deficit through a mix of austerity measures, a clampdown on widespread tax evasion and a multibillion-euro privatizations plan. «We’ll borrow about 4.5 billion euros in the third quarter of 2006,» Public Debt Management Agency chief Spyros Papanicolaou told Reuters in an interview. «We will reopen a three-year and a five-year bond, raising about 1.8 billion and 1.1 billion euros, respectively. We also plan to reopen a 10-year bond, raising about 1.2 billion euros, and also have a T-bill issue of 450 million euros,» he said. Total borrowing is projected at about 30 billion euros this year, compared with more than 35 billion in 2005. The country has already borrowed 21.5 billion euros since the beginning of the year, and plans one or two private placements between now and the end of June, Papanicolaou added. «Probably we will have one or two private placements until the end of the first half, part of the 30-billion-euro total for 2006, as planned in the beginning of the year,» he said. For 2006, the government forecasts the budget deficit to fall to 2.6 percent of GDP from 4.5 percent last year. Earlier this month, the European Commission projected Greece’s deficit will reach 3 percent of GDP in 2006 and widen to 3.6 percent in 2007.