Spending demands pile up

Deputy Finance Minister Petros Doukas must be feeling he has the most thankless of tasks these days: Faced with a host of demands for money from other ministries that total more than 3 billion euros over and above budgeted expenses, his response has to be unfailingly negative. The widespread speculation that the government may be considering holding an early election in 2007 is increasing the pressure, as additional demands received directly from ministries or indirectly from local party officials and various professional groups and interests are proliferating. However, Economy Minister Giorgos Alogoskoufis has given strict instructions that nothing outside the budget «passes.» Demands received by the General Accounting Office include: construction of public infrastructure facilities, such as schools, roads, hospitals, embassies and prisons, costing about 1.5 billion; the introduction of a single salary structure for all public sector employees that would require bringing many categories on a par with others, costing about 750 million euros; raising the basic wage of military personnel, which would cost an extra 150 million; supplementary benefits for police personnel, representing 70 million euros; hiring of 2,500 teachers, costing 50 million euros; hiring 2,000 hospital nurses, also costing 50 million; and various issues concerning pensioners and disabled people – another 50 million. The sum of demands, even though it does not affect the 2007 budget which will be unveiled on November 20, is a clear threat to the government’s fiscal stability drive. Official sources say no matter how strenuously the government may be pursuing this goal, its efforts are always at risk of being undermined. The latest example was last week’s ruling by the wage tribunal which adjudicated in favor of huge increases in back pay for a large number of judges, in line with a provision which equalizes their salaries with those of parliamentary deputies and the heads of independent regulatory authorities. To be sure, it was not the first time in recent years that judges rule in favor of salary awards to themselves or other groups. Alogoskoufis yesterday repeated his strong opposition to court rulings that put the incomes policy in jeopardy, and said the government would move to neutralize the phenomenon. «I consider such a ruling to be entirely unjustified… It is not institutionally correct for judges to determine their salaries themselves,» he told the Sunday newspaper Proto Thema in an interview. One cannot expect the government to admit to any consideration of holding an early election but it seems that the number of ministers who believe in this eventuality is increasing. This likelihood is also indicated by an apparent change in the approach to the further privatization of OTE telecom, in which the government holds a 38 percent stake. In announcing the short-listing of 10 advisers for the sale of another tranche of the state share in the utility last week, there was no confirmation of the handing over of management of OTE as well, as previously, possibly out of fear that this would upset too many voters in an election year. Alogoskoufis says GDP may grow at 4.3 percent in Q3 Greece’s economy is seen as expanding by close to 4.3 percent in the third quarter of 2006, from a 4.1 percent clip in the first half, Greek Finance Minister Giorgos Alogoskoufis said on Saturday. He said Greek economic growth, the highest in the eurozone, must also be revised for the full year. It had been predicted at 3.8 percent. «We must revise these projections because it is now certain that the economy will expand by more than 4 percent in 2006 in Greece,» he said in a speech. He did not elaborate. Buoyant consumer spending and a rebound in investments kept Greece’s economy on a strong expansion pace in the second quarter, almost twice that of the broader eurozone on an annual basis. (Reuters)

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