Economy’s ugly reality

The previous government hid Greece’s debts and was oblivious to economic reality, making last week’s review of public deficit figures a necessity, Finance Minister Giorgos Alogoskoufis said in an interview with Sunday’s Kathimerini. Alogoskoufis remained upbeat about Greece’s economic future, saying the end of the Olympics combined with corporate tax cuts and policies to encourage investment and competition would ensure continued growth and help lower the deficit to within EU limits. Reacting to opposition criticism that the government’s recent audit of public finances was not transparent enough and had sullied Greece’s image, Alogoskoufis said his government was just making the best of a bad situation. «The problem isn’t the audit, it’s the state of public finances. It’s a matter of principle to present trustworthy and transparent budgets. However, for many years, the problems were concealed instead of being tackled. Secret deficits and debts accumulated, which, even if we wanted to, we could not hide,» said Alogoskoufis. On Saturday, former Prime Minister Costas Simitis fought back. «A government needs to take care of the country’s image, to promote a positive picture – not denigrate it and remain indifferent to the consequences because it is only interested in political gain,» said Simitis. Doubts over the reliability of Greek economic figures are not new and were not provoked by the government’s audit, said Alogoskoufis, who claimed the IMF and Eurostat had expressed concern over Greece’s official returns in the past. «There was a huge discrepancy, creating a lot of suspicion from everybody, which undermined the trustworthiness of the country,» said Alogoskoufis. On Saturday, European Central Bank Vice President Lucas Papademos, former governor of the Bank of Greece, said the revisions should have come as no surprise as the figures were in Greek central bank reports and known to Eurostat. The public deficit would be brought below the 3 percent mark stipulated by the EU by 2005, said the finance minister. He indicated this would be achieved through «curbs on waste» in the public sector and income from the conclusion of outstanding taxation cases while it would no longer have to contend with «overbudget» Olympic spending. Alogoskoufis reiterated plans to raise 1.5 billion euros from privatization programs and to start cutting corporate tax from next year.

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