ECONOMY

Gov’t hoping for EU budget leniency

Economy and Finance Minister Yiannis Papathanassiou is expected to ask the European Commission in October to grant Greece an extra year to lower its budget deficit to below 3 percent of gross domestic product. The ministry is currently putting the final touches to structural changes that it intends to push through for the Greek economy as part of the 2010 budget. Among the negotiating tools the government intends to take with it to Brussels is the fact that economic growth has fallen well below expectations. It is now seen at around zero versus the government’s previous growth estimate of 1.1 percent for 2009. The government will claim that the international financial crisis is the most significant factor behind the stagnation of the Greek economy, which has also resulted in a drop in state revenues. In the first half of the year, the revenue shortfall reached 4.2 billion euros and no one can forecast how the year’s books will close for the government’s finances. This, along with a 1.2-billion-euro overshoot in state spending, make the determined aim of lowering the budget deficit to 3.7 percent of GDP this year almost impossible. Government officials have said they are confident the European Union’s executive branch will grant Greece the extension.