Bogus budget

Since PASOK is clearly distracted by speculation over a change in the party’s leadership ahead of the coming elections and by grim forecasts should it choose against that, the parliamentary debate over the budget seems largely a formality. In fact, the prospect of maverick votes among the members of the parliamentary majority is more interesting than a discussion of economic figures. Although this passivity is unacceptable considering the significance of the debate, there is still an element of realism about it. Everyone knows that the budget is largely bogus, overoptimistic and embellished in light of the coming polls and the influence of political spinmeisters on financial issues. In addition, we all know that the government which will emerge from the elections is bound to re-examine and revise economic policies, to the extent that this is feasible. Should New Democracy win the vote (the most likely outcome), it will try to tailor the situation to its own economic policy. Should PASOK renew its mandate, it will try to cut back on its campaign pledges. As a result, there is good reason to believe that the parliamentary debate on the budget will be as bogus as the budget itself. Of course, the opposite should be the case. The data on the execution of the budget in the period from January to October 2003 that were made public yesterday (Kathimerini had already published most of these figures) show that the deficit grew by 150 percent while spending exceeded the 6.4 percent target, going up by 9.7 percent. Spending on interest exceeded forecasts twice over, while primary spending increased at a 11.6 rate, instead of the recently revised target of 7.6 percent. Public borrowing, projected at 27 billion euros for the entire year, already hovered at 33 billion by October. The public sector borrowed 1.2 billion euros in December. Growth forecasts for 2004 do not alleviate concerns raised by the abovementioned numbers. It is indicative of the situation that the quarterly report by the Foundation for Economic and Industrial Research (IOBE), which backs the growth trend, states that because of pre-election expediency, the 2004 budget introduces an expansive fiscal policy which is expected to become even more expansive (and, in effect, even more of a deficit-maker) in case of excesses, as it happened in 2003. In the light of the current situation, and with estimates painting a grim picture for the short-term future of the economy, the debate over the budget must not be reduced to bogus promises but should rather try to grapple with realities. Politicians should say now what we will unavoidably hear after the elections.