Budget targets still applicable

The government decided to put on a brave face yesterday as Eurostat confirmed Greece’s 2008 budget deficit at 5 percent and the European Union is about to place the country once again under the excessive deficit procedure. Economy and Finance Minister Yiannis Papathanassiou said after the publication of the Eurostat report that «the government’s targets for containing the deficit to 3.7 percent of gross domestic product in 2009 and below 3 percent of GDP in 2010 remain on course.» «The government has decided to tell the whole truth to citizens and in particular to take all the measures required, so that the country can emerge from the global financial crisis with the least possible consequences,» said Papathanassiou. He insisted that the course of this year’s budget will be much clearer in June and only then will the government decide whether any further action is required. Papathanassiou also focused on the important fact that the European Commission’s statistical department decided not to object to the data that Athens had submitted, while it chose to dispute the figures submitted by Denmark and the United Kingdom. Greece is not the only country to have exceeded the 3 percent threshold, with fellow-eurozone member Ireland registering a 7.1 percent deficit. Yet Greece is also up against a rising public debt that grew from 216 billion euros or 94.8 percent of GDP in 2007 to 237 billion euros or 97.6 percent of GDP in 2008, according to the data released by Eurostat yesterday. As far as growth is concerned, the Commission will issue its forecasts in early May. It remains to be seen whether it will endorse the government’s growth estimate of 1.1 percent of GDP, stick to its latest forecast of 0.2 percent or proceed to a downward revision that would take Greece closer to recession, with possible dire consequences for efforts to contain the country’s debt.

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