Greece to tidy finances

BRUSSELS – Greece yesterday promised its partners in the EU that it would move decisively to curb spending and reform its social security system, as the EU’s finance ministers approved Greece’s updated Stability and Growth Pact targets for 2002-2006 but expressed the same reservations as the European Commission did last week. These concern the need to improve Greece’s fiscal figures and curb spending after adjustments by Eurostat showed the true size of the public debt and the need for swift reforms to the labor market, the capital and goods markets and the pension system. Although such warnings have been issued in the past, the novelty this time was that Greece’s finance minister, Nikos Christodoulakis, who also presided over the ECOFIN meeting, agreed to heed them. He promised to establish a clear and binding framework to curb public spending and to take action to extend the reforms to the social security system beyond those concerning the Social Security Foundation (IKA). ECOFIN said that with regard to spending cuts, the government should also introduce binding and more specific supervisory rules for spending in certain categories, such as public sector wages. Regarding social security, ECOFIN called for the promotion of private supplementary insurance, an increase in the number of people registered with state funds (implying an increase in the numbers of those who are legally employed) and, finally, «control over spending related to the aging of the population.» Regarding the European economy in general, Christodoulakis said that the eurozone’s growth in the first half of this year is expected to be smaller than forecast. The target for the year remained at 1.8 percent of GDP, with greater growth in the second half. He expressed fear over the effects that a war in Iraq could have on tourism and the economy as a whole. The opposition New Democracy party spokesman for the economy, Giorgos Alogoskoufis, claimed that the Commission and ECOFIN warnings had shown the government’s failure to cut public spending and to carry out structural reforms.

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