Ecofin boost for Greece

The European Union’s Council of Finance Ministers, Ecofin, is expected to approve Greece’s updated forecasts of major economic indicators for the years 2006-2008 when it convenes tomorrow. According to sources, the council, as well as the more restricted Eurogroup – comprising the finance ministers of the 12 eurozone members – are expected, for the first time, to express their conviction that Greece’s 2006 budget deficit will drop to less than 3 percent of the country’s gross domestic product (GDP) without additional measures, such as raising taxes. Specifically, Ecofin will endorse the government’s target of a 2.6 percent deficit as long as the budget continues to be strictly implemented, that is, without additional spending. «(Greece’s) 2006 budget and the third-year Stability and Growth Program [the updated indicator estimates] are compatible with the general guidelines established by the European Commission for the achievement of economic and fiscal stability and the promotion of an economic system that will favor economic and employment growth,» a draft Ecofin document says. The document also «welcomes the efforts made by the Greek government and the priorities it has set for a steady and enduring reduction of the budget deficit.» Ecofin is set to repeat its warnings about the effects of the social security deficit on the budget, but will no longer criticize the government’s lack of a timetable to solve the issue. Instead, it hails its decision to call a dialogue with representatives of employer associations and employee unions and urges it to start implementing reforms after 2008. If confirmed, the Ecofin text will be a significant success for the government, which has found itself under mounting pressure at its midterm point over issues such as reforms, the wiretapping scandal and the so-called «audit» of state finances.