Brussels updated on budget woes

Greece’s National Statistical Service (NSS) will send updated estimates of the 2009 budget deficit off to Brussels today. The European Commission will look over the figures and announce its own forecasts for the Greek economy as part of its fall report at the end of October. The new government to emerge from Sunday’s elections will be called upon to test its negotiation skills right away, as it will need to arrange with Brussels the terms for an extension to the time frame in which it must cut its deficit to below 3 percent of gross domestic product. The Commission is said to be looking for a complete reform package from Greece, containing specific changes that will help to whittle down the budget deficit. Otherwise Brussels is expected to adopt a much tougher stance with Greece on both a political and economic level. The updated estimates are believed to show an anticipated budget deficit for 2009 of around 6 percent of GDP, versus a previous forecast of 3.7 percent. The target for public debt this year will also be revised upward, to above 100 percent of GDP, according to Economy and Finance Ministry sources. The previous forecast expected the debt figure to rise to 99.6 percent of GDP in 2009 from 97.6 percent last year. In an interview with Reuters yesterday, Prime Minister Costas Karamanlis said the budget deficit will be around 6 percent this year if revenue-boosting measures announced in June are implemented and that the deficit would be brought under the 3 percent EU ceiling before 2011. «We must prove first of all to ourselves and secondly to our partners that we are tidying up public finances and that we are achieving the target within the next two years,» he said. He said fiscal consolidation was also important for Greece’s credibility in international markets. Karamanlis added that Greece would not borrow any more this year, as it had met its debt needs early in the year.