ECONOMY

Three scenarios in EU growth pact

Greece’s updated Stability and Growth Pact (SGP) will include three economic scenarios, offering alternatives to optimistic initial government budget forecasts, in an attempt to measure the international crisis’s impact on the real economy, sources said. The Finance Ministry is putting the final touches to the SGP, which will be sent to the European Commission in the coming days. The first scenario will be the most optimistic and will be based on the budget, according to a source. The other two scenarios have less favorable outlooks, the source added. National Economy and Finance Minister Giorgos Alogoskoufis told Parliament during the budget vote earlier this month that «the global uncertainties are quite big» and that the targets set may be changed in January, in line with European Commission figures. The government’s financial plan for next year has been described by analysts as unrealistic, as it forecasts an annual growth rate of 2.7 percent. It also targets a lower budget deficit of 2 percent of gross domestic product, versus 2.5 percent this year. The European Commission is expected to unveil its next batch of economic forecasts for member states on January 18, ahead of the regular spring report. Sources said the January report is likely to include a «policy recommendation» for Greece, calling for ways to improve its fiscal health, lower public debt and its current account deficit. A possible decision for or against launching the excessive deficit procedure against Greece will be made along with the spring report. In the fall, there will be a better indication of 2008 deficit figures, according to a source. Tax revenues have been hit hard in recent months as the economy slows, threatening to derail the government’s fiscal policy. According to some press reports, Greece’s budget deficit figure is seen as coming in at over well over 3 percent in 2008.