Garganas worried by deficit

Growing budget deficits, in combination with high oil prices, are posing a threat to the country’s economic credibility, Greece’s central bank is expected to warn in its forthcoming autumn report. Sources told Kathimerini that Bank of Greece Governor Nikos Garganas has already expressed his misgivings to Economy Minister Giorgos Alogoskoufis, urging the need for action to rein in the budget deficit, which has been grossly inflated by the cost of hosting the Olympics in Athens. Garganas is expected to outline much of this in his interim report on the economy, which is to be submitted to Parliament in October. The report will note that, while the economy has gained significantly in credibility over the past few years, this may swiftly evaporate if no action is taken. The government will be advised to significantly reduce spending, even at the expense of some of its electoral promises whose implementation, the report will note, can be put off until the economy is in a better shape. The budget deficit is expected to top 4 percent by the end of the year.

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