NEWS

Economy to be the main focus of politics now

The crash last Saturday of an army transport helicopter that caused the death of Patriarch Petros of Alexandria and 16 other people gave the political system a sharp jolt. It coincided with the end of the Olympic Games and the start of the Thessaloniki International Fair, which is traditionally the stage for the government and opposition parties to lay out their positions on economic development. George Papandreou, leader of the main opposition PASOK party, took the opportunity this weekend to attack the government both over the economy and the long-delayed response by military and civil agencies to the crash of the Chinook helicopter on September 11. Whereas the government had appeared invincible after its convincing win in national elections in March and European Parliament elections in June, the signs of disarray in the state’s response that followed the tragedy made it appear vulnerable for the first time. After lambasting the government on the economy and its response to the crash in a speech in Thessaloniki on Saturday, Papandreou charged yesterday that the government was «of limited responsibility,» that it delayed taking decisions and that it had a significant political responsibility in handling the Chinook crisis. Papandreou said that this had demonstrated how the government did not function. Both the government and the opposition concur that the economy presents the country’s main challenge and a way out of the unexpected crisis caused by the helicopter crash, which damaged its image and tested its abilities. The government will be judged on how voters feel about their income and jobs. Over the next 10 days, the government will attempt to refocus the public’s attention to the economy and will try to show, with the new budget proposal it will present in early October, that it can achieve the double target of stabilizing public finances and promoting development. Meeting these targets will demand a great effort to curb spending and raise revenues, as well as measures to achieve a growth rate of 3.9 percent of GDP in 2005. The government will therefore concentrate on public works in the provinces, measures aimed at encouraging construction in the private sector, privatization, and deregulation of markets that will open up the economy and spur business activity. The 2005 budget will anticipate a deficit of 2.8 percent of GDP, which appears especially ambitious given that the deficit for 2004 is expected to shoot up to 5.3 percent of GDP. Finance Minister Giorgos Alogoskoufis believes that cutting spending while increasing revenues will help (at least) to approach the target. He also estimates that not having Olympic projects to complete will shave about 1 percent of GDP off the deficit. He expects to save another 0.5 percent by trimming primary spending, mainly by squeezing ministry budgets, and another percentage point by increasing tax revenues through the settlement of outstanding tax cases. Alogoskoufis also believes that 3.9 percent GDP growth is a realistic aim, as he expects more tourism in 2005 and an improvement in the European and international economy in the coming year. Furthermore, he stresses that despite the reduction in the Public Investment Program from 9.5 billion to 8 billion euros, as Olympic projects are finished, they are still at 5.5 percent of GDP and will provide a significant boost to the countryside.