ECONOMY

Eurostat to confirm 5 percent budget deficit in 2008

Eurostat is today expected to confirm the estimate that Greece’s budget deficit last year climbed to 5 percent of gross domestic product (GDP), thus forcing the government to take measures to raise around 5 billion euros to trim the figure to 3 percent by 2010. After the fifth revision of the deficit estimate for 2008, the Economy Ministry has concluded that it comes to 12.29 billion euros. For this reason, Minister Yiannis Papathanassiou told British newspaper the Financial Times yesterday that, «if deemed necessary, we will take additional measures in the next few months, regardless of the political cost.» Eurostat had exerted pressure on Athens to review its deficit figures as it suspected they had been manipulated. The revision sent last Thursday to Brussels has reportedly satisfied the European authorities, who are likely to avoid adding to their report any notes regarding the reliability of the data from Athens. Still, this does not rule out a new revision of the 2008 deficit in October. Asked to explain the swelling of the 2008 deficit, Papathanassiou told the Financial Times that the surplus of social security funds, local authorities and hospitals had been overestimated and that European Union funds amounting to 0.5 percent of the GDP from last year have been transferred to 2009. As for the 2009 deficit, Eurostat will set an estimate of just under 5 percent and wait to see what measures the government will take. Some of the measures in the pipeline, set to be announced at end-June, include an increase in road tax of between 20 and 50 percent, a rise in the special consumption tax on fuel, alcohol and expensive cigarettes, and the taxation of so-called semi-open spaces (covered balconies with walls on three sides and open on the fourth) that should raise between 1.5 and 4 billion euros. Other measures planned concern the legalization of a number of electronic games, and the issuing of title deeds to 200,000 families who hold public property totaling 2,000 square kilometers. Holders will have to pay for the deeds. Meanwhile, the International Monetary Fund (IMF) is forecasting that Greece’s public debt will soar from 95 percent of GDP last year to 109 percent in 2010, against an Economy Ministry estimate of 96.1 percent. This huge difference is attributed to different forecasts about growth and deficits, as well as the cost of the 28-billion-euro package in support of banks that the IMF expects to burden the public debt by the equivalent of 4.1 percent of GDP.