ECONOMY

Gov’t to submit two versions of 2007 budget

The government will submit its 2007 budget under old but also upwardly revised gross domestic product figures, which will bring its deficit to 1.9 percent of GDP, Finance Minister Giorgos Alogoskoufis said yesterday. Greece announced earlier this month it was reviewing its national output data to include parts of the black economy, boosting GDP by 25 percent, a move Brussels said would take months to scrutinize and approve. Under EU supervision for under-reporting its deficit to the EU for years, Greece must bring it under the 3 percent of GDP EU ceiling this and next year or face sanctions. The minister said the deficit for 2006 would shrink to 2.1 percent of GDP under the revised GDP, compared with an original target of 2.6 percent, and to 1.9 percent instead of 2.4 in 2007. He said the revision would also help reach a balanced budget earlier than expected. «The tentative target date for a balanced budget was 2012,» Alogoskoufis told foreign correspondents. «Now I think we can bring it forward to 2010.» If approved by Eurostat, the revision of national output data may make Greece, which joined the eurozone in 2001, appear more prosperous than before, less in need of EU funds, and obliged to increase its contribution to the EU budget. Alogoskoufis said any retroactive upward adjustments in Greece’s contribution would not derail the deficit target. «Even if it is added to next year’s budget retroactively, it will not affect our under-3-percent-of-GDP target,» the minister said. He said the main focus would be to implement the strict budget «rigorously» without giving in to political pressures from upcoming elections to relax fiscal policy. Alogoskoufis said questions raised in Brussels over Greece’s GDP revision were due to the size of the increase but he was confident the Greek statistics would be approved. Eurostat would take up to nine months to validate the figures. He said the revision was long overdue and that from now on, Greece would do it more frequently, every five years as is the EU practice. «We don’t expect another major (GDP) revision before the next census, which is expected in 2011,» he said. (Reuters)