Prime Minister Costas Karamanlis, who left yesterday on his summer holidays, will be back on Monday to prepare for his speech a month from now to the Thessaloniki International Fair (TIF), the setting where prime ministers traditionally spell out their economic policy priorities for the following year. Given the tightness of the fiscal situation, Karamanlis is said to have accepted the advice of Economy and Finance Minister Giorgos Alogoskoufis to refrain from promising any immediate improvements in income or handouts to the poor. Officially, the government line, as expressed by a Karamanlis adviser to Kathimerini, is: «We have no reason at all to resort to the usual pre-election pyrotechnics. On the contrary, we have every reason to try and successfully conclude our efforts to put the economy right.» Actually, Karamanlis, though not in the mood to promise everything to everybody, as he did before the March 2004 election, which he won, would like to have something to promise immediately. However, the great lag in public revenues and the imperative need to lower the budget deficit to below 3 percent of the country’s GDP by next year, from over 6 percent in 2004, are huge constraints. Karamanlis’s, and Alogoskoufis’s, major worry is to achieve the (revised) deficit target in 2005; that is, 3.5 percent of GDP. Alogoskoufis himself, in a radio interview earlier this week, appeared pessimistic: predicting at first that the deficit would be 3.6 percent, he immediately added «in any case, lower than 4 percent.» At present, the government will be hard pressed to achieve even the higher number. If it fails to do so, painful, and unpopular, spending cuts await next year. Already Alogoskoufis has informed his fellow ministers that he will reject any request for new funds if it is not coupled with a report showing that the minister in question has achieved significant savings elsewhere. So, instead, Karamanlis will try a two-pronged approach at TIF. He will present himself as a steadfast reformer, referring to current legislation on work hours and bank pension funds. On top of that, he hopes to be able to announce a major breakthrough, such as the sale of Olympic Airlines. Having established his reformist credentials, Karamanlis will also spell out a long-term (up to seven-year) growth plan.