Economy effort must continue

Developments in key public finances are positive, but the real economy and inflation require close attention and continued effort, said Economy and Finance Minister Giorgos Alogoskoufis yesterday in an overview of Greece’s financial situation. He said gross domestic product (GDP) was moving ahead of forecasts, growing at a rate of 4.6 percent in the first quarter of 2007. This growth, he stated, is driven more by exports and investment than by consumption. On the budget, Alogoskoufis said that the progress of its implementation was within the targets set. This year the budget deficit is projected to fall to 2.4 percent of GDP, while it is hoped the public debt will slide to 100 percent from 104.6 percent in 2006. The debt peaked in 2001 at 114 percent, the minister said, but since then has declined somewhat, with the exception of 2004 when it rose slightly to 108.5 percent. Unemployment stood at 8.8 percent in the first two months of the year, from an average rate of 8.9 percent in 2006. The trend for 2007 points to a substantial decline in the jobless rate. «We have had a significant fall since 2004, when average unemployment was at 10.5 percent. In 2006 the rate came to 8.9 percent and estimates see it approaching 8 percent this year,» he said. The outlook is more positive for the consumer price index, he noted, stressing that expected improvements were associated with the stability seen in oil prices, albeit at high levels. «We have not had any further oil price hikes; there has even been something of a decline on average. Yet the considerable drop in Greek inflation was not solely due to oil prices, I believe. In Q1 2006 inflation was at 3.3 percent on average, whereas in Q1 2007 it was at just 2.6 percent. We therefore have a significant drop, better than our forecasts to date,» said the minister. C/A deficit Bank of Greece data showed that the current account deficit grew further in January-March, rising by 11.4 percent year-on-year to -9.01 billion, against -8.08 billion in Q1 2006. There was, however, a slight decline in March of -212 million year-on-year. Exports grew by 4 percent and imports by 3.7 percent in the same period, while foreign exchange inflows from tourism rose by 10.8 percent annually. Bills on customs code, leaseback unveiled yesterday The government yesterday presented two new bills, one on the new customs code and the other on sale and leaseback agreements for state property. The customs code contains several clauses that benefit weaker social groups which could be interpreted as an attempt to curry favor prior to national elections. The bill provides for debts of up to -1.5 billion to be written off or rescheduled, while lifting sanctions imposed on 5,000 farmers for the unlawful use of heating oil. There are also some favorable clauses for families with four or more children, for people with special needs as well as for taxi owners. The other draft law will allow the state, utilities and social security funds to sell and leaseback the properties that house their services, in order to increase budget revenues. Buyers, to be chosen through tenders, will also be able to renovate and equip buildings, Economy and Finance Minister Giorgos Alogoskoufis said yesterday.