OECD: Greek Budget Deficit To Reach 6% Of GDP In 2009
ATHENS -(Dow Jones)- Greece's budget deficit will leap to 6% of gross domestic
product this year, the Organization for Economic Cooperation and Development
said Wednesday, raising questions about the ability of the Greek government to
meet its deficit targets.
"The official target is for a deficit of 3.75% of GDP in 2009 and below 3% in
2010, but this is based on earlier, more optimistic growth assumptions and the
initial, low estimate of the 2008 deficit," the OECD said in its June 2009
economic outlook.
"On the basis of the announced deficit-reduction measures and weaker activity,
the deficits are likely to reach 6% of GDP or more this year and next," it
added. "The government needs to raise credibility by announcing a detailed and
realistic medium-term fiscal consolidation plan."
Due to higher interest payments on national debt, slowing economic growth,
higher outlays for social programs and rising tax evasion, Greece has seen its
budget deficit widen sharply in the past year.
In March, the government announced sweeping measures to freeze civil service
wages and raise taxes in an effort to close the budget gap. But further measures
- including new taxes - are likely to be announced this month.
In its report, the OECD also painted a bleak picture of Greek economic
activity this year and next, with GDP expected to contract 1.3% in 2009 before
growing at a meager 0.3% rate in 2010.
By contrast, the European Commission expects the Greek economy to shrink by
0.9% this year while the Bank of Greece expects zero growth, or a slight fall.
The Greek government's official forecast is for the economy to grow at a 1.1%
rate in 2009, although that figure is expected to be revised down.
OECD Web site: www.oecd.org
-By Alkman Granitsas, Dow Jones Newswires; +30 210 331 2881; alkman.granitsas@
dowjones.com
(END) Dow Jones Newswires
06-24-090445ET
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