NEWS

Doubts over budget feasibility

Just a day after Finance Minister Giorgos Papaconstantinou presented a budget for 2011 foreseeing radical spending cuts and tax increases, concerns were reportedly mounting amid the ranks of ruling PASOK about whether the ambitious measures can be executed and, if not, what the repercussions could be on the already beleaguered economy. According to sources, even certain ministers have expressed doubts about the feasibility of raising 14 billion euros in budget savings and additional revenues next year. One of the key concerns is said to be whether the government will manage to raise billions of euros through the more efficient collection of outstanding taxes and by slashing spending in the state sector – with the debt-ridden health service and public utilities due to come under the knife first of all. Another fear, sources have told Kathimerini, is that the government might have to resort to widespread redundancies if the budget is not executed exactly as foreseen. Although Papaconstantinou said that there would be no job cuts and that the only concrete plan is not to renew short-term contracts in the public sector, there are widespread fears that authorities might give in to pressure from Greece’s international creditors to make quick savings by carrying out layoffs. Prime Minister George Papandreou, who yesterday traveled to Lisbon to attend a two-day NATO summit, has stressed that the budget will not harm «social cohesion» by cutting jobs and pensions. But the premier has reportedly also told his ministers not to make any concessions in executing the budget as this would send out a negative message to the financial markets, to which Greece hopes to return next year. Alternate Defense Minister Panos Beglitis voiced these concerns yesterday. «If we all start pulling this budget apart because we can’t or don’t want to implement it, then things will become very difficult,» Beglitis said.