EU urges Greece to cut deficit and make up for past

EU officials yesterday urged Athens to take immediate action to reduce the public deficit but did not announce any penalties, despite confirmation that the figures on which Greece based its eurozone entry were wrong. The announcement came after a meeting of European Union finance ministers (Ecofin) in Brussels. «It is of paramount importance that the Greek government comply fully and rapidly with budgetary discipline in support (of) the single currency,» the ministers said in a joint statement. There was no public indication of the claim made by Economy and Finance Minister Giorgos Alogoskoufis on Monday night that Greece would have until 2006 to bring its deficit under the EU limit of 3 percent of GDP. However, sources indicate that that was what was privately agreed upon between the 12 officials. Greece’s adoption of the euro in 2001 was based on its 1999 deficit of 1.8 percent of GDP. The newly revised figure is 3.38 percent. Ecofin ministers seemed content to let Greece off with a mild warning while acknowledging «that part of the revisions reflect the uncertainties in the transition to the new… methodology introduced at the time of the March 2000 fiscal notification.” Alogoskoufis highlighted a comment in the Ecofin statement that made mention of the cooperation offered by the Karamanlis administration. «This reference recognizes the contribution of today’s government in the clearing up of the state of the country’s public finances and consequently the restoration of Greece’s trustworthiness,» he said. After making it clear that Greece’s eurozone entry, or continued membership, was not in question, Economic and Monetary Affairs Commissioner Joaquin Almunia said he would propose that the Commission began an «infringement procedure» against Greece which may result in financial penalties. He failed to mention the possible suspension of cohesion funds, a penalty threatened in the past.