NEWS

Growth will fund social spending

Prime Minister Costas Simitis made clear yesterday that his government would exhaust its four-year mandate and that elections will be held next spring. In a news conference in Thessaloniki, Simitis also defended his government’s decision to hand out benefits to a broad range of social groups, adding that the total cost of such measures would come to 2.6 billion euros. Responding to opposition claims that Greece would have to borrow to pay for this, Simitis said that the amount would be covered easily by the economy’s growth rate. In a news conference that also dealt with domestic politics, foreign affairs, the 2004 Olympics and social issues, Simitis dismissed claims that the 1.7 billion euros’ worth of measures announced by him last Tuesday was a pre-election move. He put the «social package» in the context of long-term government policy, following such successes as entry into the EU’s Economic and Monetary Union, the impending EU accession of Cyprus, and so on. «With the social package that we announced, we have come close to the EU average (for social spending). It is the first broad, important sector in which we achieve convergence,» Simitis said. With elections due early next year, Simitis has reshuffled his party leadership and has begun to present measures (from higher unemployment benefits to cheaper cars) aimed at gaining back voters lost after years of austerity that led to the country’s eurozone membership. On Wednesday, the Cabinet will decide on a «Convergence Charter» detailing further measures aimed at bringing Greece in line with the EU average. Simitis yesterday dismissed the fact that his party is behind in the polls, saying it had been there before. «Should we have changed our policy and abandoned our aims?» he asked. «Of course not. Because we have a set date and we have a target. The elections will be held in the spring of 2004 and we are working with this in mind,» he said. «We have said that the social package that we announced is worth 1.7 billion euros. We have also said that there will be other measures that will bring the total of our effort to 2.6 billion drachmas.» Simitis said that the social package and public sector wage increases would come to 1.5 percent of GDP. «In 2004, the GDP will grow by 10 billion euros,» Simitis said. «So where will we find the money (for the ‘social package’)? From this increase and nowhere else.» Simitis also noted that, «In 1994, some 65 percent of our revenues were going to paying interest on debt. Another 35 percent was left over for social policy and other activities. In 2002, we spent about 25 percent on interest payments.» «There is no problem,» Simitis insisted, regarding paying for the measures. «I assure you there is no problem. This is the result of a planned, coordinated and decisive policy which has developed since 1996.» Meanwhile, a nationwide telephone poll conducted among 1,000 people two days after the social package was announced, found that 14.4 percent were very satisfied by the social measures, 31.2 percent were quite satisfied, 22.2 percent were a little satisfied and 25.5 percent were not all satisfied. Nevertheless, the DIMEL poll, published in the Investor’s World paper on Saturday, found that overall, 37.3 percent would vote for New Democracy if elections were held now, 29.0 percent for PASOK, 3.7 percent for the Communist Party and 2.7 percent for Synaspismos Left Coalition, with 18.1 percent undecided.