IMF says deficits will remain below 3 percent of GDP

The International Monetary Fund (IMF) says Greece will manage to bring its 2006 budget deficit to a level acceptable by the European Union and will lower it further in 2007. In its biannual report, the IMF forecasts the 2006 budget deficit at 2.8 percent of GDP and the 2007 deficit at 2.6 percent. GDP growth will remain strong in 2006, according to the IMF, reaching 3.7 percent, but will ease slightly to 3.5 percent in 2007. Average inflation will reach a higher-than-expected 3.6 percent this year, only dropping slightly to 3.5 percent in 2007, the IMF says. «Whatever the forecasts, we will continue to work for a fiscal restructuring,» said Economy and Finance Minister Giorgos Alogoskoufis. «Our goal is to arrive at a balanced budget by 2012,» he added. Officials close to Alogoskoufis said that he hopes the IMF will be proved wrong on GDP growth, which may reach 4 percent in the fourth quarter of 2006. Some heartening news, including the fact that industrial sales surged 20.5 percent in June, give reason for hope. The fact remains, however, that Greece’s growth is still based on private consumption, itself driven by credit growth.