ECONOMY

Alogoskoufis warns he will not give in to ministers’ demands for extra funding

Economy and Finance Minister Giorgos Alogoskoufis said yesterday that Greece’s exit from the European Union’s excessive deficit monitoring procedure did not mean that he would consider any of his fellow ministers’ urgent demands for more outlays any more favorably than in the past. Alogoskoufis told reporters that, for 2007 and 2008, the government will continue to follow a fiscally tight line in accordance with the forecasts it has submitted to the European Commission. Asked about the demand by Public Order Minister Vyron Polydoras for a bonus to be given to police officers immediately, and which amounts to 8 percent of their basic salary, a demand accompanied by a threat to resign if it is not accepted, Alogoskoufis said that he would meet with Polydoras tomorrow to discuss the issue. Alogoskoufis explained that this bonus has already begun being provided to the police, in installments, since the last quarter of 2005. «We will see what can be done within the constraints of the budget,» he said. Commenting on the Commission report, Alogoskoufis said that for Greece to get out from under the EU’s close supervision, the government needs complete data on the implementation of the 2006 budget. That is why its efforts over the last couple of months of 2006 to contain spending to within the budget’s provisions are very important. A strict fiscal policy will continue in the following years, but at a somewhat more relaxed pace. Bringing the budget deficit to below 3 percent of Greece’s GDP this year was the first, and most important, step toward reforming public finances. The goal is to achieve a balanced budget, or one with a slight surplus, by 2012. It is important for Greece to continue economic reforms, especially those included in the EU’s Lisbon Process regarding the technology sector. Reforms regarding technology must be accelerated because they are the best hope for improving Greece’s competitiveness, he said. Alogoskoufis also referred to the decline in personal savings as a result of increasing consumption. «This is a serious issue. At the same time, of course, we are improving public savings. But the fact remains that savings in Greece are not enough to fund the investments needed to boost the country’s growth. That is why we have all these big current account deficits. However, as long as these deficits are financed by capital inflows, which have been considerable over the past few years, I don’t think there is reason to worry,» Alogoskoufis added.