More austerity measures ruled out

With one eye on next month’s local elections, when PASOK expects to be on the receiving end of a popular backlash against its austerity measures, the government moved quickly yesterday to douse suggestions that it would have to make more cuts this year because Greece’s public deficit will be revised upward. Finance Minister Giorgos Papaconstantinou denied that any new measures would have to be taken following comments late on Monday by European Economic Affairs Commissioner Olli Rehn which suggested more cuts would be needed. «Fiscal targets for 2011 will be maintained, which may require some additional measures of fiscal consolidation in order to stick to the fiscal targets,» said Rehn after a meeting of the Eurogroup of European Union finance ministers. It is expected that Greece’s deficit for 2009 will come to 15.1 percent of gross domestic product in figures that Eurostat, the EU’s statistical arm, is due to announce soon. Until now, it had been estimated that the deficit would stand at 13.8 percent of GDP. The country’s debt is also due to be revised from 115.4 percent of GDP to 127 percent. Rehn said that the recalculation of the deficit and debt, as a result of «some new findings that have to be reclassified as public entities» means that the new figures are unlikely to be announced this week, as originally planned. The numbers will probably be available in mid-November instead. Sources in Athens said that all ministers were told to stick to the line set by Papaconstantinou: that the deficit revision would not lead to any extra measures being taken before the end of the year. PASOK insists that any further cuts will come in 2011 and will come from public spending, not pensions or civil servants’ wages. Other measures, such as further hikes in value-added tax, are to be discussed with the EU and the International Monetary Fund once the deficit figures are known. The government’s unwillingness to put itself in the firing line before the November 7 local elections was also evident yesterday from Health Minister Andreas Loverdos’s apparent reluctance to rule out a further grace period for restaurants and bars in the implementation of the smoking ban.

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