Budget goal unattainable, says IOBE

The Finance Ministry will not be able to achieve the fiscal goals set in the 2009 budget unless additional measures, such as tax hikes, are implemented, according to a report made public yesterday. Lawmakers passed Greece’s 2009 budget late on Sunday, a plan seen as unrealistic due to the downturn in global economic conditions. The Foundation for Economic and Industrial Research (IOBE), a nonprofit research group, said in its quarterly report on the economy that projections for revenue and expenditure are exceptionally optimistic and difficult to achieve. «Meeting the targets, without additional measures and an improvement in the general economic climate, will be difficult, if not impossible,» it said. The 2009 budget plan aims to reduce the deficit to 2.0 percent of gross domestic product from 2.5 percent this year. The economy is tipped to expand at an annual growth rate of 2.7 percent, versus 3.2 percent this year. IOBE warned that any attempts by the government to provide the economy with fiscal stimulus «would send a negative message to the markets and will have an unfavorable impact on the cost of financing the economy.» Greece faces the prospect of higher debt repayments, as the gap between Greek 10-year bonds and benchmark German bunds has recently hit record levels.