Athens hands EU rundown on deficit

Greece offered new, detailed assurances to the European Commission yesterday that it can meet its target of reducing its bloated public debt to acceptable levels next year. In a letter to Economic and Monetary Affairs Commissioner Joaquin Almunia, Economy and Finance Minister Giorgos Alogoskoufis set out a series of measures designed to ensure that the deficit – forecast to reach 5.3 percent of GDP this year – can be brought down in 2005 to 0.2 percentage points below the eurozone ceiling of 3 percent. Alogoskoufis, who yesterday met his German counterpart, Hans Eichel, in Berlin, said the target could be attained through increased tax revenue, spending cuts and privatizations. The minister said most of the savings in expenditure, an estimated 1.03 percent of GDP, would come automatically due to this year’s extraordinary high spending for the Athens Olympic Games. This had pushed up spending on public projects to 1.37 percent of GDP in 2004, a sum which is projected to be 0.34 percent in 2005. A policy of restrained salary and pension increases will also result in savings of 0.29 percent, while the new tax law passed in July is expected to bring in a minimum 0.35 percent of GDP in 2005. Last month, a Commission report described Greece’s promised 2005 deficit reduction as being «based on a rather optimistic scenario.» Speaking to journalists in Berlin, Alogoskoufis said that while there are still «certain open issues» regarding Greece’s economic data for 1999, there is no issue of re-examining Greece’s eurozone membership.