‘Greece needs more austerity to hit targets’

Πηγή: Culf Times

Nov 26 2011

Greece’s budget deficit will not fall below a key eurozone ceiling by 2014 as planned if the debt-laden country fails to decide additional austerity measures in June, a set of updated budget forecasts revealed yesterday.

Assuming no more measures are taken, Greece’s budget deficit will shrink to just 4.2% of gross domestic product in 2015 instead of the 1.1% assumed under a previous set of forecasts made in June, the finance ministry data showed. 

The government also forecast debt as a percentage of GDP would fall to 125.6% in 2015 from about 162% this year, assuming a debt reduction plan under its latest financial rescue agreed in October goes ahead. The bailout is aimed at reducing Greece’s debt to 120% of GDP by 2020. 

The new data are part of the country’s updated mid-term fiscal plan for 2012-2015, which was revised to take into account the country’s deeper-than-expected recession and a debt cut plan agreed by the country’s lenders last month. 

“The revised mid-term plan does not take into account the additional fiscal measures that will be finalised and announced in June,” a senior finance ministry official told Reuters. “We stick to the target to reduce the deficit to below 3% by 2015,” the official added. 

Greek Finance Minister Evangelos Venizelos said on Wednesday the country’s next government after elections are held early next year will have to specify additional fiscal measures in June. 

The front-runner to win the poll, the conservative New Democracy party, has ruled out any fresh austerity measures despite backing the broad fiscal targets.

Greece is struggling through its fourth year of recession and needs the next tranche of funds under a bailout deal if it is to avoid bankruptcy next month.