Alarm for Greek finances

Greece is the European Union country most at risk of running into public finance problems because of its aging population, according to a report issued yesterday by the European Commission, which has been backed by Greek financial experts as well. The report says Greece is at the top of a list of «high-risk» countries and needs to urgently review its public expenditure and reduce its public debt. Brussels fears that with a rapidly aging population, over the next few years Greece will face a huge rise in social security spending, which by 2050 will rise at double the rate of most other EU members. The findings have been backed by an Alpha Bank report which suggests Greece’s aging population is one of the biggest economic problems the country will have to tackle in the years to come. Alpha Bank said that the current rate of aging means that the average age of the Greek work force will increase as fewer young people enter the labor market. At the same time, spending on pensions will have to increase. In its 2006 social security budget, which was made public in August, the government said that spending on pensions is expected to rise to 24.5 billion euros this year, an 8 percent increase from 2005, as the number of contributors to social security funds continues to drop. After handing his interim report on the Greek economy for 2006 to Parliament on Wednesday, Bank of Greece Governor Nicholas Garganas also highlighted a looming deficit in the social security system as one of the key problems that Greece has to tackle. He urged the ruling conservatives to continue with structural reforms, saying that they had a «public responsibility» to do so. He said that particular attention should be paid to health care and pensions. «We have a very large problem until 2050,» Garganas said, highlighting the rising demands of an aging population. «We must not stop in our push for further reforms,» he added.