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Greek Deficit to Exceed Forecast
By COSTAS PARIS And ALKMAN GRANITSAS
ATHENS—Greece's 2010 budget gap is expected to reach 9.3% of gross domestic product, well above the country's forecast, forcing the government to implement further spending cuts to bring its fiscal-tightening plan back on track, a senior government official said Thursday.
The official also said Greece's budget deficit last year is expected to be revised sharply higher, to more than 15% of GDP, up from the current estimate of 13.8%. "We now expect the budget deficit for this year [to be] at about 9.3% and the revised 2009 figure will likely be above 15%," the official said. "This means extra measures will have to be taken, but it will be slashing spending rather than new taxes or reducing salaries."
Since May, when Greece narrowly avoided default with the help of a €110 billion ($151.57 billion) loan backed by the International Monetary Fund and European Union, the country's ruling Socialist government has implemented a harsh, multiyear austerity program of spending cuts and higher taxes.
Under the terms of the loan, Greece aims to cut its budget deficit to 8.1% of GDP this year, from an estimated 13.8% gap in 2009, and to 7.6% of GDP in 2011. However, lagging tax revenue to date indicates that Greece will miss this year's deficit forecast by about €2 billion.
Moreover, Eurostat, the EU's statistics agency, next week will revise its estimate of Greece's budget deficit for 2009. With a higher starting point for the deficit last year—more than 15% of GDP rather than the current 13.8% estimate—that too means the government will have to adopt further spending cuts to meet its fiscal responsibilities for next year.
The revised figures from Eurostat will play a key role in the 2011 final budget to be tabled next week. "Final touches will be put together after the meeting with our visitors [from the IMF and EU] early next week and it will be a very tough negotiation," the senior person familiar with the matter said. "It will be the most difficult budget in decades."
Analysts estimate that in absolute terms, Greece will need an additional €4 billion in new measures—over and above those already disclosed—to meet its 2011 deficit goal. Those measures are expected to be detailed in the final 2011 budget, which is due to be outlined next Thursday.
Late Wednesday, the Greek Finance Ministry said the budget deficit between January to October was down 30%, below the 32% forecast for that timeframe. "According to preliminary data for the state-budget execution for the ten months of 2010, on a fiscal basis, the deficit is €17.4 billion compared to €24.8 billion during the same period in 2009," the finance ministry said.
According to a statement, ordinary budget expenditure declined by 7% year-to-year, but net revenue increased by only 3.7%—well below the country's goal.
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Un commento sulle previsioni di bilancio del "Wall Street Journal".
By COSTAS PARIS And ALKMAN GRANITSAS
ATHENS—Greece's 2010 budget gap is expected to reach 9.3% of gross domestic product, well above the country's forecast, forcing the government to implement further spending cuts to bring its fiscal-tightening plan back on track, a senior government official said Thursday.
The official also said Greece's budget deficit last year is expected to be revised sharply higher, to more than 15% of GDP, up from the current estimate of 13.8%. "We now expect the budget deficit for this year [to be] at about 9.3% and the revised 2009 figure will likely be above 15%," the official said. "This means extra measures will have to be taken, but it will be slashing spending rather than new taxes or reducing salaries."
Since May, when Greece narrowly avoided default with the help of a €110 billion ($151.57 billion) loan backed by the International Monetary Fund and European Union, the country's ruling Socialist government has implemented a harsh, multiyear austerity program of spending cuts and higher taxes.
Under the terms of the loan, Greece aims to cut its budget deficit to 8.1% of GDP this year, from an estimated 13.8% gap in 2009, and to 7.6% of GDP in 2011. However, lagging tax revenue to date indicates that Greece will miss this year's deficit forecast by about €2 billion.
Moreover, Eurostat, the EU's statistics agency, next week will revise its estimate of Greece's budget deficit for 2009. With a higher starting point for the deficit last year—more than 15% of GDP rather than the current 13.8% estimate—that too means the government will have to adopt further spending cuts to meet its fiscal responsibilities for next year.
The revised figures from Eurostat will play a key role in the 2011 final budget to be tabled next week. "Final touches will be put together after the meeting with our visitors [from the IMF and EU] early next week and it will be a very tough negotiation," the senior person familiar with the matter said. "It will be the most difficult budget in decades."
Analysts estimate that in absolute terms, Greece will need an additional €4 billion in new measures—over and above those already disclosed—to meet its 2011 deficit goal. Those measures are expected to be detailed in the final 2011 budget, which is due to be outlined next Thursday.
Late Wednesday, the Greek Finance Ministry said the budget deficit between January to October was down 30%, below the 32% forecast for that timeframe. "According to preliminary data for the state-budget execution for the ten months of 2010, on a fiscal basis, the deficit is €17.4 billion compared to €24.8 billion during the same period in 2009," the finance ministry said.
According to a statement, ordinary budget expenditure declined by 7% year-to-year, but net revenue increased by only 3.7%—well below the country's goal.
***
Un commento sulle previsioni di bilancio del "Wall Street Journal".
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