ECONOMY

Gov’t prides in economy

Economy Minister Giorgos Alogoskoufis yesterday basked in the prospect of Greece exiting the regime of fiscal supervision by Brussels, after bringing the country’s huge public deficit below the mandated ceiling without jolting the economy. «In the last two-and-a-half years, Greece achieved perhaps the most spectacular macroeconomic results, in relation to the other European Union members. We combined the great reduction in public deficits with very high growth rates and a drop in unemployment,» he told reporters after a session of European Economy and Finance Ministers (Ecofin) in Brussels. Greece brought its public deficit down to 2.6 percent of gross domestic product (GDP) in 2006, against a 3 percent cap required. The 2007 budget projects a further drop to 2.4 percent. However, the proposed upward revision of GDP by about 25 percent, which is awaiting approval by Eurostat, is expected to further cut the deficit figure to below 2 percent, but this gain may be more than offset by national contributions to the EU budget. Alogoskoufis made it clear that the expected lifting of the excessive deficit procedure against Greece some time later this year does not mean a let up of medium-term efforts to shore up public finances, which are aimed to achieve balanced or even surplus budgets in the years ahead. Separately, Economic and Monetary Affairs Commissioner Joaquin Almunia said in a reply to a question by Greek Euro MP Dimitris Papadimoulis that Greek households’ debt, despite a sharp increase in recent years, still represented only 46 percent of GDP last September, against a eurozone average of 60 percent. «The 88 percent increase since 2003 reflects the acceleration of economic activity, expectations of rising incomes… and the reduction in the cost of borrowing as a result of the adoption of the euro and continuing liberalization of the credit sector in Greece,« Almunia said. Almunia said the Commission predicts that Greek household debt burden will rise to 67 percent by 2008, slightly above the eurozone’s 66 percent average.