NEWS

Budget history made

The 2002 draft budget unveiled yesterday by National Economy and Finance Minister Yiannos Papantoniou, has two unique features. It is the first budget to be drawn up entirely in euros and also the first to provide for two outcomes, depending on the level of growth the economy will achieve in 2002. Greece’s adoption of the euro as its national currency in January 2002 and the eventual replacement of drachma coins and notes with those of the euro by the end of February necessitated the drafting of the budget in euros. The global economic slowdown and the, as yet, unforeseen consequences of the September 11 terrorist attacks in the United States, have forced the government to present two alternative scenarios, a highly optimistic one and one for what they would perceive as the worst-case scenario, which still appears somewhat optimistic and may have to be revised by November 20, the date the government has set itself to present a final budget to Parliament. Even in its more confident scenario, the government has had to retreat from earlier forecasts of 5 percent growth in 2002 and opt for a 4.6 percent figure. If the government’s worst-case scenario of 4 percent growth is borne out, Greece’s economy will grow at almost twice the pace of that of the EU countries. This would be mainly due to massive EU fund inflows and the expected construction boom ahead of the 2004 Olympics. The budget has four main aims, said Papantoniou; to improve the surplus to 1.3 percent of the country’s gross domestic product (GDP), to lower the public debt to 95.2 percent of GDP by the end of 2002, to boost growth by increased spending on investment and to provide more funds for social policy in sectors such as education and employment. Wages, according to the budget proposal, will rise at a pace only slightly quicker than that of inflation. Civil servants’ wages will rise by 2.5 to 3 percent and pensions by 3.5 percent. Despite the economic slowdown, the draft budget expects revenues to increase by 7.8 percent. The optimism becomes even more obvious where the Athens Stock Exchange is concerned: The budget expects turnover to triple, boosting government revenues from this source to 150 billion drachmas, from 50 billion expected this year. The 2001 draft budget estimated such revenues at 280 billion drachmas. Giorgos Alogoskoufis, spokesman for the opposition New Democracy Party, called the budget the latest in a series of fictitious budgets, and called for a tax reform with lower tax rates. An Athens court yesterday acquitted civil engineer Vassilis Lavidas of responsibility for the collapse in the September 1999 earthquake of an apartment house on Tatoi Street, north of Athens, which killed three occupants. The court found that the structural faults that caused the building to collapse had been on the ground floor, for which Lavidas had not been responsible.