Greek credit rating is cut; gov’t upbeat

While preparing to submit his 2005 budget to Parliament today, Economy and Finance Minister Giorgos Alogoskoufis yesterday indicated he was confident that Greece will lower its deficit below the EU limit by next year and not make use of a possible 2006 extension it has been offered by European officials. «We will deal with the problem during 2005. We think the goals set by the budget are attainable,» said the minister. He plans to reduce the deficit from a projected 5.3 percent of GDP for 2004 to 2.8 percent by the end of next year. Alogoskoufis elaborated on the deal he claimed had been offered to Greece during Tuesday’s meeting of EU finance Ministers (Ecofin). He said Economic and Monetary Affairs Commissioner Joaquin Almunia suggested giving Greece an extra year’s grace in order to reduce its public deficit to below the 3 percent eurozone limit. The proposal will not be put formally on the table until next month’s Ecofin meeting, Alogoskoufis said. Meanwhile, international credit rating agency Standard and Poor’s lowered its long-term sovereign credit ratings for Greece from «A-plus» to «A.» The rating reflects the government’s ability to repay capital and interest to investors holding its bonds. «The downgrade reflects the lack of a resolute strategy to achieve rapid and lasting improvements to the government primary balance and to initiate a significant and sustained decrease of the public debts ratio,» a statement from Standard and Poor’s read. PASOK spokesman Nikos Athanassakis said this was a new wound to the Greek economy. He also attacked the government for allegedly losing face in Europe through its handling of the economy. «All that Greece has managed is to lose trust and its authority, which had been built through the hard work of all Greeks in previous years,» he said. His comments were rejected by deputy government spokesman Evangelos Antonaros. «Greece is putting a definite end to a period of dishonesty in the handling of public finances. Those in PASOK responsible for cooking the books continue to pretend that they do not understand, even though they left great problems behind,» said Antonaros.