ECONOMY

Gov’t hopes for H2 turnaround

Economy and Finance Minister Yiannis Papathanassiou expects that the government’s recently adopted tax measures will help turn around state finances in the second half of the year, while he ruled out hitting businesses with any additional one-off levies. In a bid to help boost sagging tax revenues, the Finance Ministry announced in June tax hikes on fuel, mobile phones, lotteries and cars with over 2-liter engines, among others, as part of an effort to glean an additional 2 billion euros for state coffers. The government also said it will cut spending and crack down on tax evaders, as it looks increasingly unlikely it will meet its 2009 fiscal goals. «We believe that the situation in the second half will be reversed, because all the steps we have taken will pay off in the second six-month period,» Papathanassiou told reporters after meeting with Prime Minister Costas Karamanlis. The country’s slowing economy, widely expected in 2009 to enter its first recession in 15 years, has resulted in an annual drop in state revenues of more than 3 percent to 22.1 billion euros between January to June, versus a targeted growth rate of 14.7 percent. Papathanassiou also said the ministry is not planning to introduce any one-off taxes on businesses, denying press reports that suggested the new levy will be announced in September. The Foundation for Economic and Industrial Research (IOBE), a nonprofit research group, said in a report released yesterday that is «exceptionally difficult, if not unachievable» for the government to reduce the budget deficit to 3.7 percent of gross domestic product in 2009 from 5 percent last year as planned. IOBE said the decline in economic activity, which has seen unemployment climb to 9.4 percent, may bring about more job losses, taking into account a weaker tourism season this year. It projects unemployment will worsen to 9.5 percent in 2009.