Greece yesterday unveiled an updated EU stability and growth plan for 2007-2010, projecting economic growth at 4.0 percent next year, and envisaging the elimination of public deficits by the end of the period through a 2.3 percent increase in revenues and a 0.3 percent fall in expenses. «The main aim of the Greek government is to continue to cut the general government deficit by 0.5 percent of GDP in structural terms. A second goal is to achieve a balanced budget by 2010,» the Finance Ministry said. «Continuing economic growth at high rates is facilitating the improvement of public finances.» Under the plan, the first since the country was removed from the European Union’s list of budgetary offenders in June this year, the economy will expand by an annual 4.0 percent pace in 2009 and 2010. The previous growth estimates for 2008 and 2009 were 4.0 and 4.1 percent respectively. The plan sees this year’s budget gap at 2.7 percent of GDP with economic expansion averaging 4.1 percent. The budget deficit will shrink to 1.6 percent of gross domestic product in 2008 and further to 0.8 percent in 2009, with a balanced budget targeted in 2010. Public debt is projected to shrink from 93.4 percent of GDP this year to 91 percent in 2008, 87.3 percent in 2009 and 82.9 percent in 2010. The projections are based on upwardly revised GDP data after approval by EU statistics agency Eurostat. Unemployment is seen as falling from 7.6 percent this year to 6.0 percent in 2000. The ministry said pension system reforms, a key part of the effort toward fiscal consolidation, were necessary due to an aging population and its expected impact on public finances. Growth momentum The growth momentum of the Greek economy is seen as being maintained with further reductions in tax rates, the implementation of investment schemes under the incentives law and European Union subsidies, public-private partnerships and the continuation of structural reforms. The government’s baseline scenario assumes stable world oil prices and a contained impact from credit market woes. The dollar/euro parity is seen at an average of 1.42 for the next three years, while interest rates are projected to rise from 4.3 percent this year to 4.5 percent in 2009 and 2010. The updated 2007-10 plan sees the country’s bloated current account deficit, about 10.4 percent of GDP in January-October this year, shrinking slightly during the period. An alternative worse scenario projects a decline of the public deficit to 0.4 percent of GDP by 2010. (Kathimerini, Reuters) Greece to borrow about 37 bln euros in 2008 Greece, one of the eurozone’s most indebted economies, plans to borrow some 37 billion euros ($53.7 billion) next year to refinance maturing bonds and cover the deficit, the head of the country’s debt agency said yesterday. «The total borrowing for 2008 will reach about 37 billion euros,» Spyros Papanicolaou, head of the Public Debt Management Agency (PDMA), told Reuters in an interview. Greece borrowed -37.3 billion in 2007, exceeding a previous -35 billion target, partly due to relief spending after destructive forest fires during the summer, he said. Borrowing under the name of Hellenic Republic, Greece is currently rated A1 by Moody’s and A by both Fitch and Standard & Poor’s. Greece, which joined the eurozone in 2001, is struggling to reduce its debt as a percentage of gross domestic product. Public debt is projected to drop to 91.0 percent of GDP in 2008 from an estimated 93.4 percent this year. Papanicolaou said that almost 70 percent of next year’s borrowing will take place in the first half. «We plan to raise about -27 billion in the first six months to cover the expiration of old bonds,» Papanicolaou said. «In the first quarter we plan to issue three new benchmark bonds, with maturities of three, five and 10 years.» PDMA also plans to reopen 30- and 15-year paper and an inflation-linked bond that matures in 2030, all in the first half. Papanicolaou did not provide further details on the amounts to be raised, saying this would depend on market conditions. Asked about the possibility of an upgrade to Greek debt, Papanicolaou said, «Continued fiscal adjustments and the acceleration of structural reforms will help upgrade the credit rating of the Greek economy.» Asked about the impact of the global credit crunch, Papanicolaou said the problem «was mostly being felt in the financial sector and not by eurozone sovereign borrowers.» He did not want to comment on ECB rates.