Greece’s 2007 budget foresees solid economic growth of 3.8 percent and a budget deficit within European Union (EU) guidelines, according to a draft plan presented by Finance Minister Giorgos Alogoskoufis yesterday. The deficit is seen narrowing from a projected 2.6 percent of gross domestic product this year to 2.4 percent in 2007 – within the 3 percent limit allowed by Brussels. Economic growth is expected to perform strongly on the back of solid domestic demand and investment spending. «The basic aim of our economic policy in 2007 is to secure development on a long-term basis, boost employment, and strengthen our social policy,» the minister said. Solid expansion rates are expected to help fuel job growth as unemployment is tipped to drop to 8.2 percent by the end of next year. The new budget also includes tax relief for low income earners as the tax-free threshold will rise from 11,000 euros currently to 12,000 euros. «We are moving ahead with our tax reforms that will boost middle incomes,» Alogoskoufis added. The Finance Ministry has also promised to gradually lower the 30 percent income tax rate to 25 percent in 2009. Alogoskoufis stressed that the budget does not take into account any pre-election spending. The conservative government’s four year term is scheduled to end by March 2008. According to Alogoskoufis, the average wage earner will see his spending power rise by three percent next year. This target, however, is largely reliant on volatile petrol prices. Government sell-offs are expected to continue next year. The privatization agenda aims for revenues of 1.7 billion euros that will go towards paying off part of Greece’s massive public debt. Sell-offs will include a cut in Greece’s holding in OTE and the listing of public gas corporation DEPA on the Athens bourse. Opposition parties described the budget plan as socially unjust and hiding lost of tricks. «Indirect taxes that weigh mostly on wage earners and pensioners are rising at a record rate of 8.8 percent. The additional burden on the taxpayer in 2007 is 3.2 billion euros,« PASOK said.