Ambitious budget to cut deficit to 2.8 pct

As the government tries to get back into Brussels’s good books, it unveiled yesterday an ambitious draft plan of the 2006 budget that aims at lowering the deficit to below 3 percent for the first time in recent years. Finance Minister Giorgos Alogoskoufis said that next year’s budget deficit will abide by the European Union’s 3 percent deficit limit for eurozone countries as the state tightens public spending. «The basic goal includes the restoration of budgetary balance and the securing of long-term viability of public finances,» he said. Next year’s deficit is expected to shrink to 2.8 percent of gross domestic product from around 3.6 percent this year. Alogoskoufis said this aim could be achieved, despite sluggish growth in the EU, by targeting tax dodgers. The conservative government has highlighted structural reforms and more efficient state spending as key aims, while changes such as early retirement schemes have helped reduce the head count in some of the larger state companies, slashing labor costs. Alogoskoufis’s calls for improved budgetary balance were echoed by Prime Minister Costas Karamanlis downtown in Parliament yesterday. «We are creating a modern and efficient state. The ministries are obligated to improve transparency and… reduce wasteful spending,» Karamanlis told his party’s deputies. The draft budget, which was submitted to Parliament yesterday, also foresees an economic growth rate of 3.8 percent of GDP next year, among the highest in the EU.