Tight rein on public spending

Figures released yesterday showed that the government has begun to rein in public spending as it prepares to have its blueprint for the course of the economy until 2007 approved by EU finance ministers today. The General Accounting Office (GAO) said yesterday that state expenditure had fallen by 5 percent for the first two months of this year, compared to 2004. The government is under pressure to curb spending over the next two years if it is to meet the European Commission-imposed deadline of end-2006 in reducing its deficit to below the eurozone limit of 3 percent of GDP. Originally, the government had projected 4 percent growth in spending for the beginning of this year. However, any joy at reducing state outlays will have been tempered by the fact that the GAO also found that public revenues during January and February grew by just 3.7 percent, against the 2005 budget forecast of 11.4 percent. Meanwhile, eurozone finance ministers, including Greece’s Giorgos Alogoskoufis, were discussing last night in Luxembourg the government’s revised Stability and Growth program. The program, submitted to the European Commission last month, aims to reduce the deficit to 2.8 percent of GDP by the end of next year. The program includes the recently introduced indirect tax rises and was praised last week by European Commissioner for Economic and Monetary Affairs Joaquin Almunia for its commitment to cutting the deficit. The Eurogroup of ministers is expected to follow suit and applaud Greece for its efforts to shape up the economy. The council of all 25 EU finance ministers (Ecofin) is due to give the program the final green light today, but is also likely to warn Greece that it needs to undertake serious reform of its social security system.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.