ECONOMY

Inflation remains main concern

The current global financial turmoil mainly affects the United States and will have a limited impact on Europe, including Greece, mainly in terms of inflation which is difficult to tackle, Economy and Finance Minister Giorgos Alogoskoufis said yesterday. «Any impact will be limited. The biggest danger is inflation, which is imported. Our means for dealing with this bad international conjuncture are limited,» he told Skai Radio. Alogoskoufis said the intensification of inflationary pressures was due to the rising prices of oil, food and raw materials, but in Greece, where inflation was steadily higher than in the other eurozone countries, weak competitiveness was also to blame. «We have high profit margins due to inadequate competition in many sectors,» he said, noting that the Development Ministry had recently announced a broad batch of measures to battle rising prices. The Economy Ministry is in the process of revising its inflation and growth targets. The projection of 4 percent growth this year, according to the basis scenario in the government’s Stability Program will be reduced to 3.8 percent, while the inflation estimate of 2.7 percent will be upped to 3 percent. Alogoskoufis said the limited revision of the figures in no way implies a revision of the budget figures as well, despite the difficulties posed. He did not rule out limited changes to the social security reform bill now in Parliament. «There may be some small changes, of secondary importance, but the essence of the reform will be left untouched,» Alogoskoufis said. He said the aim of the bill was not to lighten the fiscal burden of the pension system on the budget. «The aim is to rationalize the system and secure its long-term viability.» Alogoskoufis said the reform was «mild» and did not rule out more reform measures in future. «We have to give this bill a chance to be implemented. Future governments will assess the results and further revisions may be needed then,» he said. Alogoskoufis made it clear that the government is not considering reducing social security contributions as an incentive to battle evasion. «There is no such planning. Everyone has to pay their dues. We must all realize that when we cheat insurance funds we steal pensions,» he said.