Pending crisis

On the one hand, we have a prime minister who, besides other things, insists that the economy is on track. On the other, there are all the others, including the government functionaries at the State’s General Accounts Office, who are deeply concerned about the looming fiscal crisis – a crisis the government is doing nothing to halt. The implementation of the budget so far should have already raised concerns within the Socialist administration. Simply put, government spending has overrun economic forecasts while revenue is below expectations. The government had set the target of increasing spending by 6 percent but this had climbed by 14 percent in the first four months. It also planned to increase public revenues by 5 percent, but this rose by a scant 1 percent. Despite any reasons or excuses that may be invoked, one can only be disappointed by the fact that in the first four months of 2003, Greece received absolutely no money from the EU as no funds came through the Public Investment Program. To be sure, no promise or upbeat forecast about our economic prospects is reliable and realistic. First, there is the economic strain of the 2004 Olympic Games as all related projects must be completed on time, in spite of any objections regarding their cost, which has long overrun initial forecasts and which will balloon further because of last-minute expenses. Furthermore, it is an open secret that the country has entered a lengthy pre-election period that could go on for another year. Needless to say, pre-election periods are extremely costly and there is no sign that Simitis’s administration plans to break with the habit of lavish handouts in an attempt to polish its tainted image. Every reasonable and neutral observer can see that the country faces the specter of a serious fiscal crisis for 2005 (assuming that the Games will force officials to blanket the issue). Some very adverse factors, such as the coming parliamentary elections and the Olympics, are bound to impose an additional fiscal burden. Even now, at the last moment, the government must take measures to avert, or at least to soften the effects of the pending crisis.

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