ECONOMY

Alogoskoufis sees need to keep fiscal vigilance

Greece has to continue efforts toward fiscal consolidation in 2008, according to European Union guidelines, which provide a strong shield against the difficulties facing the global economy, Economy and Finance Minister Giorgos Alogoskoufis said yesterday. «The European economy is in a strong position, due to the reforms pursued in past years and the fact that the updated Stability and Growth Pact has been applied successfully,» he told a press briefing on the European Union’s finance ministers’ council (Ecofin) which he attended in Brussels at the start of the week. «There was agreement (at the Ecofin meeting) that we must fully respect the targets of the Stability and Growth Pact, which has adequate provisions and rules for dealing with all situations, including the present,» Alogoskoufis added. However, «what worries us is the risk of imported inflation from oil, raw materials and foodstuffs.» «The risk is that this imported inflation could grow into a problem in Europe, through a wage-price spiral. This would definitely create a serious problem for the European economy,» Alogoskoufis said. Investment Separately, Alogoskoufis said the reforms of recent years bode well for a pickup in Greece’s lagging investment record, despite the uncertain outlook in the international economy. «The year 2008 will be for us one of significant investment, despite the considerable uncertainties in the global economy. The reform work we have done in past years, particularly tax reform, has laid the groundwork for investment to show a significant rise in 2008 and the coming years,» Alogoskoufis told an event at the Hellenic Center for Investment (ELKE). He said that the boost to investment will come through the investment incentives law (schemes with budgets totaling more than 8.7 billion euros have already been approved), public-private partnerships, public investment and programs for small and medium-sized enterprises. Alogoskoufis said ELKE, whose role is to attract large investment schemes, «has to play its role even more energetically,» although it has managed to unblock important proposals languishing for years due to bureaucratic obstacles. Regarding foreign direct investment in particular, he noted that, «despite the progress of recent years, we still have great room for improvement ahead.»