ECONOMY

Greece hopes for fiscal flexibility from EU

Greece willbe hoping for flexibility from the European Commission in the application of its 3 percent rule as data show the country’s budget deficit for 2007 hitting 3.5 percent, according to sources. Eurostat is expected to announce by the end of November that Greece’s deficit last year reached 3.5 percent of gross domestic product (GDP), rather than 3.4 percent, as announced by the Finance Ministry. The government, however, will be looking to get off the hook and avoid the excessive deficit procedures and oversight, as a number of EU countries seek more flexibility in their budget targets due to the global economic downturn. There is no change expected in the Commission’s restrictions but member states are pushing for more time to correct any fiscal breaches. Finance Ministry officials will also be keen to show Eurostat that Greece has taken the necessary steps to keep the deficit within allowable limits in the near future. In August, the Finance Ministry introduced a series of new taxes, including those on dividends and share capital gains, in a bid to up revenues by some 4 billion euros each year. According to government estimates, the budget deficit in 2008 is expected to be cut to 2.3 percent with a further reduction to 1.8 percent of GDP in 2009.