Deficit hits 7.22 bln

The day after Finance Minister Nikos Christodoulakis presented the draft of his proposal for the 2004 general state budget, the figures related to the past eight months of this year have come to show a dramatic worsening in public finances. From January to August, the execution of the budget shows that the deficit has almost doubled from that which was forecast. It has widened by 91.7 percent (compared to the same period in 2002) and has reached 7.22 billion euros when the forecast for the whole year was for it to be reduced to 5.3 billion euros. Furthermore, spending appears to be bloated and is twice what was forecast, surging to 11.2 percent from 5.2 percent. The greatest shortfall is in the revenues of the Public Investment Program, which are down by 54.8 percent, showing the government’s inability to absorb EU funds. About 941 million euros have been absorbed, from 2.08 billion in the same period last year. This difficulty was shown also by a European Commission document (610684/ CAD/11177/11-9-2003) released by New Democracy officials on Thursday which presented a detailed report on the most important problems regarding the loss of EU funding. It showed that apart from the loss of more than 600 million euros, of the remaining 1.08 billion of the Second Community Support Framework (CSFII) only 350 million euros had been approved, raising the danger of further losses. Overall, the handling of public finances appears to be very troubled, raising questions as to the draft budget that Christodoulakis made public. The Finance Ministry released the eight-month figures yesterday, though they were due to be released at the end of September. This spared Christodoulakis the embarrassment of presenting his 2004 budget on Thursday against a backdrop of a 2003 deficit that had almost doubled. In the eight-month period, interest on servicing the public debt grew by 7.9 percent (compared to a target of 2.9 percent), while public revenues grew by 3.7 percent, instead of the 5.1 percent forecast. Military spending has become an added problem for the economy. Military debt at the end of 2003 will come to 8.9 billion euros (6 percent of GDP) and is expected to hit 11.3 billion or 7 percent of GDP next year.