ECONOMY

Greece starts to put house in order

The country’s EU stability plan, which prompted the Commission to take disciplinary action against Greece, will get the economy out of the crisis in the best possible way, according to Economy and Finance Minister Yiannis Papathanassiou. «It will be strictly and consistently implemented and will lead us out of the crisis with the least possible consequences,» he told reporters after a government economic committee meeting. On Wednesday, the European Commission began disciplinary steps against Greece and five other European Union countries for exceeding the bloc’s budget deficit limit. The Commission expects the Greek shortfall to be 3.7 percent this year, the third year in a row it has been above the limit, and 4.2 percent next year. Targets in Greece’s stability plan are more upbeat, forecasting a 3.2 percent budget deficit next year. The EU sets a deficit ceiling of 3 percent of gross domestic product (GDP) and nations that breach the limit can be subject to economic sanctions, though none have so far been fined. On the growth front, Greece anticipates GDP to expand by 1.1 percent this year versus the Commission’s 0.2 percent GDP forecast. Papathanassiou said the Finance Ministry has started to implement steps aimed at tidying up state finances. «Regarding expenses, all flexible expenses have been recorded and will be cut by 10 percent. It has also been decided to reduce all (public sector) contract staff by 10 percent,» the minister added. Meanwhile, data released yesterday by the Bank of Greece, the country’s central bank, showed the country’s current account deficit widened to 14.5 percent of GDP last year from 14.2 percent in 2007, although the gap in December alone fell sharply year-on-year. The large current account deficit is seen as a key macroeconomic imbalance that threatens growth and jobs in the long term.