NEWS

2004 budget aims for growth, higher incomes

The general state budget proposal for 2004, which the government presented to Parliament yesterday, is based on the expectation of growth of 4.2 percent of GDP, from 4 percent this year, and a deficit of 1.2 percent, from 1.4 percent this year. The budget is expected to help raise per capita income to 84 percent of the EU average, increasing wages by 3.4 percent above inflation. National Economy and Finance Minister Nikos Christodoulakis, who presented the budget, said that Greece’s growth will be the highest in Europe next year and will continue to create new jobs and curb unemployment, bringing it down to 8 percent from 9 percent this year. State utility rates will be frozen for at least the first half of the year, he said. «Olympics infrastructure investments and regional development are determining factors of the budget,» Christodoulakis said. Spending related to the Olympics has been spread over several ministries and ranges from security for the Games to major construction projects. Parliament will vote on the budget at midnight on Dec. 22 after a five-day debate that is traditionally seen as a vote of confidence in the government. Prime Minister Costas Simitis’s PASOK party has 156 seats in the 300-seat chamber and needs a simple majority to approve the budget. MPs will begin discussing it in committee on Nov. 26. The budget forecasts that the public debt will drop to 98.5 percent of GDP in 2004, from 101.7 percent in 2003. Inflation is expected to remain high, at 3.5 percent. Revenues are expected to rise by an optimistic 6.2 percent, compared to the 5.2 percent expected in 2003 after intensive efforts by the tax authorities. Spending is expected to increase by 6.9 percent, which will be a tough feat to pull off in view of elections next spring and the pressure from various social groups for wage increases. The European Commission has predicted a deficit of 2.4 percent next year, double that in the budget. Christodoulakis explained the 425-million-euro excess spending in 2003 as the result of an increase in hirings. He expressed conviction that development will continue after 2004, stressing that money going toward the Olympics will fund investments. New Democracy’s shadow finance minister, Giorgos Alogoskoufis, said the budget’s figures lacked credibility. «The government also ignores the forecast of the European Commission which speaks of a deficit double that of the 2004 budget,» he said. He added that the proposal does not account for spending equal to 1 percent of GDP which is not in the budget.