Progress report filed
The government yesterday sent the European Commission its latest progress report, the third of its kind since the Greek economy was placed under supervision last year over excessive budget deficits and public debt. The report describes current economic developments and outlines planned reforms. The report promises that efforts to lower deficits and improve the financial standing of state-controlled utilities will continue. It also refers to the beginning of dialogue on social security reform, although the government has made it clear that this will be a long-term process with no tangible results in its current term, which ends in April 2008, at the latest. The report emphasizes the efforts the government makes, in collaboration with EU statistics agency Eurostat, to improve the quality of data reporting, which has been heavily criticized recently. The report forecasts 1.6 billion in revenue from privatizations this year, mostly involving the banking sector. End of probation Greece’s economy is in its second year of supervision by the EU and the main aim is to reduce the budget deficit to a level below 3 percent of GDP, compared to a newly revised 4.5 percent for 2005. A deficit level less than 3 percent will mean the country will no longer be under supervision. The government will emphasize the significant increase in budget revenue (18.6 percent in March compared to a full-year target of 10 percent) and the reduction in public spending (attributable to lower spending on the public investment program) as evidence that public finances are finally under control. It will also argue that the increase in revenue is not due to one-off measures but to structural changes made within the Economy and Finance Ministry that have helped fight tax evasion. An element of uncertainty concerns the Commission’s response to the 1.1 billion euros in «extraordinary revenue» forecast in the 2006 budget. According to sources, the Commission will only agree to include half the amount in the budget and the shortfall will have to be replaced by other revenue, probably from income tax. The government touts utilities reform as a pillar of its program. Although the deadline for utility personnel and management to agree on pay rises expired yesterday and was informally extended for two weeks, the progress report expresses its certainty that the agreements will be signed and no government intervention will be required.
