Economic plan gets thumbs-up from Brussels

The European Union yesterday approved Greece’s stability program for the next three years and welcomed efforts at reducing the budget deficit, indicating that the government will not be required to introduce any unpopular taxes to abide by EU rules. A European Union Council of Finance Ministers (Ecofin) meeting in Brussels gave the thumbs-up to the 2005-08 economic plan, which includes forecasts of major economic indicators for the three-year period. The plan sees the economy expanding this year by 3.8 percent, one of the strongest growth rates in the EU, and a budget deficit of 2.6 percent of output. Monetary Affairs Commissioner Joaquin Almunia was upbeat on the report and said that improvements in the country’s budgetary health are evident. «If you note where the deficit was at the end of 2004 [and] where it is now, we will see how important the improvements are,» he said. The budget deficit in 2004 has been estimated at 6.6 percent of GDP, about 11 billion euros. In the event that Greece does not bring the deficit to below 3 percent, the country faces stiff sanctions. Although the news was expected, the conservative government let out a sigh of relief yesterday. Prime Minister Costas Karamanlis said the Ecofin approval recognizes that the government’s goals can be achieved without any extra measures. «This is more than just about numbers in the next budget. These efforts are helping secure a more certain future for all of us,» Karamanlis said as his government moved past its two-year anniversary in office last week. Economy and Finance Minister Giorgos Alogoskoufis, who has been at the center of the controversial revisions of budget numbers, described the approval as a vote of confidence for the economic policy being adopted. «The government has responded quickly by implementing measures targeting tax evasion, moves which are starting to pay dividends,» the minister said. The year has had a positive start for the Economy and Finance Ministry. Tax revenues in the first two months have soared more than 16 percent, doubling target rates. Almunia, however, reminded Greece that it must stick to the plan being adopted and that it needs to implement structural reforms while the country is enjoying solid economic growth. The commissioner also repeated calls on the government to rein in social security expenses which threaten budget stability. The government has said it will soon start a dialogue with workers and bosses on pension reforms in a plan that is expected to be implemented over the next 15 years. Decisive steps are not expected to be made during the government’s current term in office, which ends by March 2008.