‘Special’ 2004 budget

The Cabinet yesterday discussed a draft of the 2004 state budget proposal which Prime Minister Costas Simitis said was aimed at achieving development and social justice while also getting Greece ready for next year’s Olympics. The budget, which will be presented to Parliament on Monday, forecasts 4.2 percent GDP growth next year, an increase in revenues of 6.2 percent (when it appears unlikely this will reach 5.2 percent this year) and spending growth of 6.9 percent, from 6.4 percent this year. The budget deficit is forecast at 1.2 percent. This year it was forecast at 0.9 percent but is expected to exceed this. The public debt is expected to be 98.5 percent of GDP, or 163.9 billion euros, at the end of 2004. This year it is likely to be 101.7 percent of GDP, over the forecast of 100.2 percent. High defense spending has kept the debt so high. Addressing his ministers, Simitis spoke of «a budget with special characteristics» and noted the consequences that the 2004 Olympics will have on it. «The Games are not a long-term project but their costs are being registered now,» Simitis said. He noted that if the government could create a climate of greater confidence in the economy, PASOK would have reason to hope for victory in the coming elections. The budget, Simitis said, «is aimed at development, it spurs employment and the just distribution of revenues. It is social and it is connected to the construction of infrastructure works and the carrying out of the Olympic Games.» Noting concerns expressed by some ministers, he said, «Some will object because, for example, they would like to see more hirings, but we can’t do everything at the same time, because there are rules and because a great increase in spending could make inflation and deficits grow.» New Democracy’s spokesman for financial issues, Giorgos Alogoskoufis, questioned the veracity of the draft. «The figures we have in mind for the past eight months show that the deficit is more than double what it was a year earlier, spending has been excessive, there is a great shortfall in revenues both in the budget’s revenues and public investments,» he said. «If the basis of the budget used for the draft does not take these things into consideration, next year’s budget will be totally unrealistic.» Christos Polyzogopoulos, chairman of the General Confederation of Greek Labor (GSEE) called for a 6 percent rise in the minimum wage.

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