25th April 2007, 13:28
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Quote: Finmin reiterates goal of mild fiscal adjustment
Greek Economy and Finance Minister George Alogoskoufis on Tuesday said that verification by the European Commission of the country's fiscal deficit at 2.6 pct of GDP in 2006 was a very positive development.
Speaking to reporters, the Greek minister stressed that it was premature to make early judgements on the continuation of an excessive fiscal deficit procedure and noted that Greece would exit the procedure after the Commission evaluated the sustainability of the country’s fiscal deficit.
?We have to ensure that the deficit will remain below 3 pct of GDP this year and that it will fall by 0.5 pct,? he said, announcing a further cut of public spending by 430 million euros.
Alogoskoufis said the European Commission, in its spring estimates for EU member-state economies to be published on May 7, would announce whether Greece met its obligations before submitting its final recommendation to EU Commissioners and the ECOFIN council.
The Greek minister said annual fiscal adjustment should be around 0.6-0.7 pct of GDP - from 0.5 pct currently - and added that more emphasis would be given to combating tax evasion, leaving room for a redistribution of spending to more efficient social priorities. This goal will be included in a revised Stability and Growth Programme, due in December 2007, covering the period from 2008 to 2010. Alogoskoufis said the revised programme would include the goal of balanced budgets.
He said the government would adhere to a goal of cutting the fiscal deficit from 2.6 pct in 2006 to 2.4 pct of GDP this year.
Commenting on an ECOFIN meeting in Berlin, Alogoskoufis said EU member-states have begun discussing ways to move faster towards presenting balanced or surplus budgets.
?Greece can achieve the goal of balanced or slightly surplus budget by 2010 instead of the 2012 initial target. This means an additional adjustment of 0.6-0.7 pct of GDP, instead of a current 0.5 pct,? he noted, adding that annual fiscal adjustment exceeded 2.5 pct so far and stressed that even with the new adjustment rates of 0.6-0.7 pct, fiscal adjustment will be milder in the coming years.
Commenting on a bid by Cyprus to enter EMU, Alogoskoufis said that the European Commission made a recommendation based on purely economic criteria and stressed that no political criteria were mentioned. ?We are cooperating with Cyprus on its bid to enter the Eurozone,? Alogoskoufis said.
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