The Greek government is steadfast in its goal to bring its fiscal deficit below 3.0 pct of GDP this year and to bring it further down in the future aiming to present balance budgets in the medium-term, Greek Economy and Finance Minister George Alogoskoufis said on Tuesday.

Speaking to reporters, after an ECOFIN meeting in Brussels, the Greek minister said the general government’s deficit fell from 6.9 pct of GDP in 2004 to 4.5 pct in 2005 and was expected to fall to 2.6 pct in 2006. Alogoskoufis stressed that from the 4.3 percentage point’s fall in the deficit, 3.7 points were of structural nature.

The Greek minister said 2005 was a crucial year for the Greek economy, since the government had to achieve a significant fiscal adjustment and to avoid the risk of economic recession after the Athens 2004 Olympic Games. “An economic recession could risk the sustainability and the public acceptance of our fiscal effort,” Alogoskoufis said adding that “by implementing a carefully drafted mixture of economic policy, were managed to maintain growth rate at 3.7 pct and to lower unemployment, achieving one of the biggest fiscal adjustments in a year”.

The Greek minister said structural reforms focused on medium-term goals of improving competitiveness and establishing fiscal discipline.
Commenting on this year’s budget, Alogoskoufis said the state budget’s deficit eased to 3.625 billion euros in the first five months of 2006, from 6.164 bln in the same period last year, a decline of 41.2 percent. Primary spending rose 4.1 pct, down from a budget target for an annual growth rate of 6.0 pct and a projected growth of nominal GDP by 7.4 pct this year.

Alogoskoufis said regular budget revenues rose 6.7 pct, not including a 409 million euros in non regular revenues. Net revenues, after tax returns, rose 10.5 pct compared with a 10.3 pct budget target for the year. VAT revenues rose 12.6 pct, while total revenues were up 14.8 pct in June and VAT revenues jumped 22 percent in the month.

The Greek minister underlined that Greek authorities would continue their fiscal restructuring and structural reform program in the coming years and stressed that the government aimed for a fiscal deficit of 2.3 pct in 2007 and 1.7 pct of GDP in 2008, goals based exclusively on permanent measures as included in the country’s updated Stability and Growth Plan.

Alogoskoufis underlined structural reforms made in domestic markets of products, simplification of procedures for start-up of new enterprises, and corporate taxation. “A new improved investment law led to a more efficient system of public procurement and tax inspections,” he said adding a program of privatizations, a reform of banks’ pension system, a restructuring of public sector enterprises, expanding shopping hours and changes in working time and overtime pay was currently under way.

Alogoskoufis said the government’s aim was to focus more on micro-economic reforms in the pension problem saying “we are aware of the problems in the existing pension system” and added that a long-term dialogue has begun to find the wider possible consensus on solving the problem.

The Greek government was in close cooperation with Eurostat seeking ways to improve collection and processing of fiscal data and said any differences with the EU’s statistics agency would be resolved soon.

Commenting on a meeting with EU Commissioner on Regional Policy, Danuta Hubner, Alogoskoufis said discussions were currently underway to cover lost ground after a low absorption rate of EU funds in the first four years of a Third Community Support Framework Program.

Alogoskoufis said the government has made significant progress in the last two years doubling the absorption rate of EU funds and expressed the hope that the issue would be resolved by the end of October.

Source: Athens News Agency

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