Growth is top priority for the year

The government’s top economic policy priorities for the new year are to maintain a high growth rate, implement the budget without deviating, proceed with further privatizations and make citizens’ dealings with tax authorities simpler and less onerous, Economy and Finance Minister Giorgos Alogoskoufis said yesterday. «The government’s goal is to boost growth and base it not only on one sector, construction, but all forward-looking sectors of the economy. Our goal is also to implement the budget as it was voted on in Parliament. We all know that 2005 will be a crucial year for the economy. It is a year during which the government will undertake new, important initiatives for the deregulation of the economy and the improvement of services provided to citizens. I would like to make special mention of the government’s decision to make the citizens’ relationship with the tax authorities much friendlier. Relations will be simplified with the use of new technologies,» Alogoskoufis told reporters after a meeting with Prime Minister Costas Karamanlis to examine the government’s economic priorities for this year. Also taking part in the meeting were Alogoskoufis’s deputies, Petros Doukas, Christos Folias and Adam Regouzas, in charge, respectively, of the country’s debt, EU fund inflows and tax receipts. During its 10 months in power, the Economy and Finance Ministry’s main achievements were the passing of new legislation on tax reform and investment incentives, privatizations (that is, the sale of most of the government’s stake in National Bank) and «the great progress in the implementation of the Third Community Support Framework (CSFIII), where the absorption rate (of funds) rose from 22 percent to 32 percent,» said Alogoskoufis. The immediate priority is to take maximum advantage of the investment incentives law – also known as the «Development Law» – to attract private investment, especially to Greece’s outlying regions, and to further improve the absorption rate of CSFIII funds, Alogoskoufis said. «The implementation of the new Development Law and the shift in emphasis to the regions (outside Attica) is a central choice for this government. In the coming months, all of us will deal with implementing the new Development Law in order to boost regional growth. There will be even greater progress regarding CSFIII, because it is vital to the country’s growth,» he said. The government hopes to reduce the budget deficit from an estimated 6 percent of GDP in 2004 to 2.8 percent in 2005. When the budget was passed, and the 2004 deficit was still estimated at 5.3 percent of GDP, Alogoskoufis had admitted the goal was «ambitious.» In order to achieve the target without painful spending cuts, the economy must grow at a pace of 3.9 percent, a prediction that, among others, the European Commission has found hard to believe. Due to extra spending on the Olympics and the two general elections, national and European, the budget deficit shot up 20.9 percent during the first 11 months of the year. Revenue also lagged behind the targets set: Instead of 8.5 percent, budget receipts rose 5.2 percent during the same period, according to figures released yesterday by the State Accounting Office. Ministers also agreed to push forward the introduction of legislation on property tax reform.