Revenues hunt is on
The government is preparing to launch a three-pronged initiative on economic policy right after the Easter holiday, sources say. This will include a draft bill on customs regulations to incorporate stricter provisions for battling tax evasion, smuggling and illegal trading. A second draft bill will concern the implementation of the European Union-subsidized Fourth Community Support Framework investment program for the 2007-2013 period, which envisages 20 billion euros in EU subsidies and 12 billion euros in national contributions. The third leg will concern the acceleration of the privatizations program, beginning with OTE telecom, where the government’s plan to find a foreign strategic partner by the end of March proved unsuccessful. It is now orienting itself toward the sale of a 15-17 percent stake through a private placement. The government now holds 38 percent of OTE. The placement of a 20 percent stake is also expected to follow for Postal Savings Bank. The government is targeting raising about 1.6 billion euros from such part privatizations, of which about 1.2 billion could come from the OTE placement. The proceeds would be used to pay down public debt. Budget off target in Q1 Increased spending levels and weakness on the revenues side have caused the state budget’s key indicators to diverge considerably from annual targets in the first quarter, according to provisional estimates. This development, which set a precedent in the period before the election of 2004, may be interpreted as indicating the government’s intention to lead the country into early elections later this year. Public revenues in the first quarter were up 3.7 percent year-on-year, against an annual target of 6.2 percent. In March, there was an actual drop of 4.2 percent in absolute figures. By contrast, primary spending is said to have increased by about double the 7.4 percent annual target rate. Economy and Finance Minister Giorgos Alogoskoufis, who is currently on an official visit to Australia, yesterday told Kathimerini that the fiscal situation is under control and attributed the adverse developments to temporary factors. As regards revenue, in particular, he said that value-added tax (VAT) receipts continued to rise at a high rate, 9.6 percent, which confirms a qualitative change. Others partly relate the unfavorable figures to the uproar created by the outbreak of the alleged scandal concerning the purchase of overpriced state bonds by social security funds about a month ago, which led to a relaxation of inspections. GDP revision Greece has committed itself, with its Stability Program, submitted to the EU, to bringing down its public deficit to 2.4 percent of gross domestic product (GDP) this year, from 2.6 percent in 2006, and its public debt from 104.3 percent of GDP to 100.4 percent. It has also set a target of achieving a budget surplus by 2012. However, the figures are expected to undergo a significant differentiation when Brussels approves, as it is expected to do later this year, Greece’s upward revision of its GDP by 25 percent. With the revised figures, the deficit is expected to turn into a surplus much earlier and public debt to fall under 80 percent of GDP, on a par with other EU members. Alogoskoufis said the GDP revision, for which the government came under fire from the opposition, was only a technical matter. «Greece relied on the 1981 census and we had to revise our GDP. The economy had undergone significant changes that were not reflected in official data. The revision showed that living standards were higher than we estimated. It also showed weaknesses in the collection of taxes and social security contributions and the existence of a strong underground economy. Having an overall better picture, we are in a better position to solve problems. Transparency never hurt anyone. The big problems are behind us but caution is needed,» he said. He added that the European Union now treats Greece as a serious and credible partner.
