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Instead of decreasing the Greek deficit is increasing drastically

05 August 2011 / 13:08:45  GRReporter
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The Greek Court of Auditors noted a disturbing trend about the state budget in 2011. Having in mind the growing debt crisis in the eurozone, which already covers Spain and Italy and right after yesterday's collapse of the world's stock markets, the biggest since the collapse of the investment bank Liman Brothers in 2008, it appears that despite the huge financial assistance for Greece amounting to hundreds of billions of euros not only its deficit is not decreasing but it is even increasing. According to the Memorandum of Financial Stability, signed by the Greek government and the Troika of the European Commission, European Central Bank and the International Monetary Fund, the country should end this year with a deficit of 17 billion and 60 million euros. According to the data about the first 6 months of the year, Greece has already accumulated a deficit of 14 billion 689 million euros.
    This means that in order to meet the objective of the Memorandum government of George Papandreou will be able to accumulate a deficit of only 400 million euros a month - a goal which economic analysts describe as unrealistic. The supervisory Troika has identified the deficit of 17 billion and 60 million euros as a "red line" which it will not cross. In this situation the only way for it to be met is to introduce additional measures to increase revenue and cut costs in the budget. Greek parliament has voted additional measures amounting to 6.5 billion euros, which are obviously not applied in practice or are insufficient.
    Data from the National Audit Office shows that budget revenues were 22 billion 539 million euros and the costs - 38 billion 937 million euros. Observing the budget is one of the three items on the agenda of the leaders of the supervisory Troika, who will come in Athens immediately after 15 August, which in Greece is a national holiday and is not a work day. The other two are privatization and structural reforms. The Greek Ministry of Finance is now optimistic that with the reduction of the allowances for civil servants, the taxation of wages and pensions and with the introduction of a new additional tax on high income, luxury cars, yachts and real estate with swimming pools it will be able to fill the gap.


News of the larger than expected budget deficit caused a decrease on the Athens Stock Exchange by 2.63 per cent and its index stopped at 1058.6 points. Greek spread-index has again moved upwards and exceeded 1328 bps.

Tags: budget deficit debt crisis Court of Auditors public sector additional taxes supervisory Troika
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