Greece pledges to halve deficit

Greece will attempt to almost halve its public deficit by 2005, in order to comply with EU regulations, said Finance Minister Giorgos Alogoskoufis yesterday. Greece has already exceeded the terms of the eurozone’s Stability and Growth Pact, which states that public deficits should not exceed 3 percent of a member country’s GDP, by incurring debt of 4.6 percent in 2003. Alogoskoufis believes the government is capable of reducing the deficit to below the EU cap by next year. Although he admitted asking EU ministers on Friday to treat the Athens Olympics as «special circumstances» which caused Greece to breach the limit, the EU has been unwilling to make this allowance. Premier Costas Karamanlis has blamed the previous, PASOK government for making false predictions about the level of public debt while knowing it was much higher, an allegation the Socialists reject. During his speech in Thessaloniki on Saturday, Karamanlis predicted the public deficit would reach 5.3 percent of GDP in 2004, compared to PASOK’s estimate of 1.2 percent. Alogoskoufis said on Monday the government’s goal is to reduce the deficit to 2.8 percent in 2005. Despite his assurances, the state of Greek finances has provoked international concern. Ratings agency Standard & Poor’s lowered its outlook for Greece from stable to negative. IMF officials, who were recently in Greece collecting economic data, also warned on Monday that the Greek economy may slow in 2005.

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