ATHENS: Greece will bring forward painful budget cuts to end a decade of primary deficits while grappling with a sixth year of recession, according to a 2013 budget draft aimed at satisfying international lenders.
The government unveiled a tough austerity budget after Finance Minister Yannis Stournaras met the so-called “troika” of International Monetary Fund, European Commission and European Central Bank inspectors, whose approval is vital to unlock the next slice of aid, urgently needed to avoid bankruptcy.
Greece will aim for a primary surplus before debt service of 1.1 percent of GDP next year, the first positive balance since 2002, after a 1.5 percent deficit in 2012. But the economy will continue to shrink for a sixth year by 3.8 percent.
Economic output will have declined by a quarter since 2008 in a vicious spiral of austerity and recession, with the most heavily indebted euro zone nation repeatedly missing targets set under its EU/IMF bailouts and at risk of being forced out of the single currency area.
Analysts said even the recession scenario set out in the budget appeared optimistic, given Greece’s slow reform efforts and a weakening euro zone economy.
“Chances are the budget targets will be missed because of the deeper recession which the cuts will bring and the inability to meet privatisation targets,” said Xenofon Damalas, head of investment services at Marfin Egnatia Bank.
The general government deficit, including debt servicing costs, will come to 4.2 percent of GDP next year from 6.6 percent in 2012, while unemployment will rise to 24.7 percent. The draft gave no target for privatisation revenues. In a sign of the daunting scale of Greece’s problems, public debt is projected to reach 179.3 percent of GDP next year.
Reuters
