Truth about deficit

Admitting that the country’s finances are not at their best this year and characterizing as very optimistic the budget which is supposed to reduce the deficit from 6 percent to 2.8 percent by the end of the year, Economy Minister Giorgos Alogoskoufis has once more drawn attention to the government’s break with the «virtual economy» during the Simitis-Christodoulakis era when everything was presented as idyllic. Acceptance of reality, however, is not a cure for the weaknesses in the economy. Measures have to be implemented that will eventually put public finances on a healthier footing. That is why the economy ministers of the European Union placed particular emphasis, in their final communique, on Greece’s commitment that it will strictly implement the 2005 budget. In any case, within the next month, the two-year deadline which the EU has given Greece so that it can lower its deficit to below 3 percent will be made official. Undoubtedly, it was the fault of the previous government that the deficit rose to 6 percent. However, its reduction to below 3 percent is the obligation of the present government, whether they like it or not. Achieving this target will be neither easy nor painless. The PASOK governments may have systematically concealed the extent of the deficit. That does not mean the New Democracy government should avoid telling the Greek people the truth about the unpleasant, if temporary, effects that the policy for lowering it might have, and which will affect many social groups. The government should not be lulled by the prospect of an «easy» initial reduction in the deficit as the nightmarish costs of the Olympics melt away, particularly the astronomical sums spent on Games security, not to mention the cost of PASOK’s pre-election handouts. Nor should it underestimate the need for structural changes to improve the Greek economy, even though these may at first seem unpopular. Neither should the government relax its efforts, basing itself on the obvious intention of leading European leaders to raise the issue of making the EU’s Stability Pact indicators more flexible. Greece is not Germany or France and cannot hope to be treated as those countries are if it fails to fulfill the commitments it has undertaken.