PM: Crisis less severe for Greece
Prime Minister Costas Karamanlis said yesterday that Greece has been affected by the financial and credit crisis to a lesser extent than other countries but warned that the government has little room to expand on its fiscal policy. «Inevitably there are consequences for the Greek economy, mainly due to rising interest rates and higher inflation,» Karamanlis warned after meeting with Bank of Greece Governor Giorgos Provopoulos and Economy and Finance Minister Giorgos Alogoskoufis. «The impact of the crisis on Greece, in relation to the real economy and the financial system, is less severe than in other countries.» Greece’s economic growth remained one of the highest in the eurozone in the second quarter of the year, expanding at an annual pace of 3.5 percent. However, growth is slowing as higher interest rates weigh on consumption and investments. «On the other hand, though, (Greece’s) fiscal margin is much smaller (than in other countries) due to the high public debt and high budget deficits that have been weighing on the economy for decades,» added Karamanlis. In a bid to lower its budget deficit to 1.6 percent of GDP this year, the Finance Ministry announced a series of new taxes last month to boost revenues hurt by the slowdown. Taxes on stock dividends and share capital gains were among the steps introduced as part of a plan that will add an estimated 4 billion euros to budget revenues each year. Greece’s central bank is also ready to step in with «every necessary measure to further protect the economy,» added Karamanlis. Last week, some of the world’s largest central banks pumped billions of dollars into financial systems to help ease the strain from the credit crisis, while regulators issued curbs on short selling, the practice of betting on a stock’s decline, in the USA, UK and other countries. [email protected]
