ECONOMY

Transport firms to enlarge deficit

Greece runs the risk of seeing its deficit widen by 0.5 percent of gross domestic product overnight and its debt rise by 5.5 percent of GDP, further increasing market worries as to whether the country will meet its budget targets and regarding the viability of state finances. The budget problems in the form of debts owed by the general government (hospitals, social security funds, local authorities etc) are not the only ones. There is also a hole that is constantly being dug deeper by the broader public sector, namely the state enterprises and corporations. Top officials at the Finance Ministry have suggested that on their latest visit to Athens the representatives of the International Monetary Fund, European Commission and European Central Bank requested that Greek authorities incorporate into the general government deficit and public debt the net loan requirements of the public companies as well as their accumulated debts. This does not yet apply to all state enterprises. For the time being, it only concerns public transport companies other than the metro and the tram. However, it does include the Hellenic Railways Organization (OSE) and the companies overseeing buses, trolley buses and the Kifissia-to-Piraeus electric railway (ISAP). The reason the experts are asking Athens to include the loan needs of these companies in the deficit and their debts in public debt is because they operate almost exclusively on state funding. The monies that are essential for them are granted through loans with state guarantees. Officials note that previous governments had also discussed the same issue but no change had ever been implemented. Now, it seems there is no room to maneuver. The transport companies’ loan needs for this year amount to an expected 1.26 billion euros, according to the 2010 budget. This amounts to 0.54 percent of GDP, should the latter reach 230.8 billion euros, as forecast in the memorandum of understanding for the loan bailout. The incorporation of those companies’ deficit into that of the general government will revise the state deficit to 8.6 percent of GDP from 8.1 percent now.