Greek Finance Ministry aims to lower deficit to below 10 percent of GDP in 2010 - The Best from Greece

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Posted on: 17/Oct/2009

The Finance Ministry is putting together a plan for 2010 worth 10 billion euros, or 4 percent of gross domestic product, aimed at lowering the budget deficit and supporting economic growth, according to a senior Finance Ministry official.

The ruling Socialists have yet to make public any estimates as to how high the budget deficit may get this year since winning the October 4 elections but the figure is believed to be almost triple the previous 3.7 percent forecast.

The government aims to bring the deficit to below 10 percent next year, while also providing a 2.5- to 3-billion-euro support package for the economy, the source said.

Last week, Bank of Greece Governor Giorgos Provopoulos said the deficit could be around 10-12 percent of annual economic output by the end of the year.

On the debt front, the government will proceed with new borrowing this year to cover ongoing obligations.

Fresh borrowing is inevitable, as state obligations due by year-end won’t be covered by current cash reserves, the official said.

Press reports have said Greece may borrow an additional 10 billion euros by the end of the year to cover its cash needs.

The Finance Ministry sold 2 billion euros of Treasury bills this week to cover expiring debt and will sell more next week.

Former Economy and Finance Minister Yiannis Papathanassiou said last month that total net borrowing in 2009 was 52.5 billion euros at the end of September.

“We hope to keep the total amount borrowed this year to below 70 billion euros,” the ministry official added, without providing any further details.

Increasing indirect taxes is also a way to boost state revenues but the official ruled out increasing value-added tax.

Other priorities that will top the government’s agenda next year will be pushing through social security reforms and deregulating professions to increase the economy’s competitiveness.







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