Deficit ‘not the end of the world’

One day after Greece received a rocket from Brussels for its high budget deficit, the country’s central bank governor yesterday called for calm while warning that spending cuts would definitely be in order. The 2003 deficit had been set by the previous government at 1.7 percent of GDP, comfortably below the 3 percent eurozone ceiling. However, the new government and Eurostat, the EU statistics service, have since revised that figure up to 3.2 percent. «The fact that we have exceeded 3 percent is not the end of the world, on condition that we adopt measures in good time,» Bank of Greece Governor Nicholas Garganas told a parliamentary committee. Overall, Garganas said 2003 was better, financially and fiscally, than previous years. The main deficiencies, he said, were the increase in the cost of labor, and inflationary pressures. Garganas also forecast a further increase in inflation as a result of rising international fuel prices and the hosting of the August Olympic Games in Athens.

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