ECONOMY

Fiscal ax cuts public investments

Greece’s Public Investment Program is headed for further cuts as the government tries to meet fiscal goals in the areas of revenues and expenditures. The reduction of public investments by 1.1 billion euros to 9.2 billion euros in 2010, from 10.3 billion last year, was just the beginning. Lower investment spending, reaching 8.2 billion euros, was pointed out in a recent report by the International Monetary Fund and concerns are now shifting toward the 2011 budget, where the program will be cut by a further 5.43 percent. The government is finding it difficult to come up with resources to support programs able to provide the economy with a boost, namely the European Union’s National Strategic Reference Framework (ESPA) and the new development law. According to a federation of small and medium-sized industries, Greece’s budgetary difficulties are responsible for pulling the brake on the European Investment Bank’s (EIB) offer of a 2-billion-euro loan secured in June last year. Despite the loan having been earmarked to cover Greece’s participation in ESPA projects, the money has yet to be drawn. According to sources, the drawing of the loan will bump up Greek government debt, something which is not allowed in the memorandum signed with the IMF and EU. Greece’s public debt is already expected to rise next year due to the inclusion of money owed by state enterprises such as Hellenic Railway Organization (OSE). The EIB finance agreement was expected to help Greece reach its 2010 target of absorbing 15 percent of ESPA funds by the end of the year. It is the largest loan Greece has obtained from the investment bank and some 30 percent of it, up to 600 million euros, could be drawn upon immediately. The cut in public investments for 2011 by 5.43 percent to 8.7 billion euros mainly hurts co-funded projects operated by the Regional Development and Competitiveness Ministry, harming the government’s ability to provide the economy with vital growth drivers.