Revenue shortfall threatens budget

A huge shortfall in revenues during January of this year widened 223 percent from a year earlier, undermining the foundations of the 2004 budget, figures from the General Accounts Office show. A shortfall of 712 million euros in January 2003 grew to 2.3 billion euros last January. These are the first official figures since the new government came to power in the March 7 elections and indicate the size of the problem it inherited. Today the European Commission will release its spring report on the European Union economies and, according to sources, it will say that Greece’s fiscal deficit will be over 3 percent of gross domestic product (GDP) in 2003. National Economy and Finance Minister Giorgos Alogoskoufis told his colleagues at an Ecofin meeting last week that the deficit would be 2.95 percent but that the government would move to reduce this by curbing state wastefulness. He also pledged to restore credibility and transparency to public finances. The Inner Cabinet discussed the issue yesterday and decided to hold a parliamentary debate on the economy soon. Greece will be among six EU countries that will be warned by the Commission for breaking budget rules or for being close to breaking them. The other five are Italy, Britain, the Netherlands, France and Germany. According to sources, Greece’s revenue shortfall continued to grow in February and March, as can be understood from the massive public borrowing in the first two months of the year, which exceeded 16 billion euros.

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