Leaner budget by 2010

Greece, in common with most other eurozone members, will have to adopt a more restrictive economic policy from next year, as a result of the requirement for balanced budgets by 2010 which eurozone finance ministers adopted in Berlin on Friday. The requirement will be reflected in a revised program of economic convergence with the rest of the eurozone which Athens will submit in December. The program envisages savings of 2.7 billion euros, which will probably come from a combination of a curb on expenditure and increased revenues. The new requirement will necessitate a further revision of the country’s updated Stability Program for the current 2007-2009 period, which provides for the gradual trimming of the country’s budget deficit from 2.6 percent of gross domestic product (GDP) last year to 1.2 percent by 2009. This latter figure roughly corresponds to 2.7 billion euros which, according to the new plan, will have to be left out of the 2010 budget. In a separate development, the European Union’s statistics agency Eurostat said yesterday that Greece had more than halved its budget deficit to 2.6 percent of GDP from 5.5 percent in 2005, basing this on old figures rather than recent, upwardly revised Greek GDP data which Eurostat is still reviewing. Greece has incurred an EU disciplinary procedure for running excessive budget deficits above the bloc’s ceiling of 3 percent of GDP. Greek debt fell last year to 104.6 from 107.5 percent. It is fairly certain that the procedure will have been lifted by the end of the year. Portugal also slashed its deficit to 3.9 percent from 6.1 percent in 2005 but saw a rise in debt to 64.7 percent from 63.6 percent. France saw its budget gap shrink to 2.5 percent from 3.0 percent and its debt decline to 63.9 percent from 66.2 percent. The third-biggest eurozone economy, Italy, recorded a rise in its deficit to 4.4 percent last year from an upwardly revised 4.2 percent in 2005. It replaced Greece as the most indebted country in the entire 27-member EU, as its debt climbed to 106.8 percent of GDP from 106.2 percent in 2005. (Kathimerini, Reuters)

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