EU concerned over developments in economy

Eurozone officials on 19 October expressed their concerns over the condition of the Greek economy. In April, Greece was asked by the (European) Council to adopt measures so as to bring the budget deficit below 3 per cent of gross domestic product in 2010. This is now clearly out of reach, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said after a Eurogroup meeting in Luxembourg. The situation can only partly be attributed to a worse-than- expected evolution of the economy. I am also seriously concerned about significant, new statistical discrepancies, he said. The comments followed a meeting between Almunia and Greece’s new finance minister, George Papaconstantinou, on the margins of an informal meeting of eurozone finance ministers in Luxembourg. Adopting an ambitious budgetary consolidation plan for the years ahead, underpinned by a comprehensive structural reform programme to restore the country’s competitiveness, is an absolute priority for Greece, Almunia said. Officials expressed concern about ongoing differences between the estimates produced by the EU’s own statistical office, Eurostat, and those of the Greek government, with Eurogroup Chairman Jean-Claude Juncker warning that such discrepancies risked undermining Greece’s credibility. Papaconstantinou noted a significant worsening in many sectors of the Greek economy and mostly an expected shrinking of the GDP by 1.5% this year, a recorded 20% decrease in investments, a 15% decline in tourism and a 20% drop in shipping revenue. Papaconstantinou also told his Eurozone counterparts that the country’s fiscal deficit would reach 12.5% of GDP this year and attributed this large deviation of fiscal data to three reasons: a negative economic conjecture; overestimating revenues, excessive public spending and a collapse of tax collection mechanisms and, finally, what he called the hiding of significant figures. The minister said he presented to his Eurogroup and ECOFIN counterparts a long-term programme of economic restructuring and deficit cutting in a period of three to four years. He pledged that with the introduction of necessary measures, Greece’s fiscal deficit would fall to single-digit numbers in 2010, at least by three percentage points.