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Various responses from abroad for the future of the Greek economy

05 October 2010 / 17:10:38  GRReporter
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The consolidation of the government finances and the tight economic policy implemented by the Greek government gave the first positive response. The rating agency Moody's made a statement that it considers the possibility to raise the credit rating of the country. "We are impressed by the reforms the government has made,” stated the senior analyst at the credit rating agency Anthony Thomas to Bloomberg.

The financial analysts of Financial Times proved to be unbelieving as they defined the financial budget for 2011 as quite ambitious and very difficult to implement. Analysts said Greece has set the difficult task to reduce the budget deficit to 7% of GDP by the end of 2011. The foreign observers of the edition said that this can not happen because of two factors – the one is the high inflation rate and the second is the high costs in the state sector, some of which have been postponed for the next year.

Meanwhile, sources from the Ministry of Finance said that the final version of the financial plan for the next year will be released on  November 18 after the European Commission approves the change of the low index of the value added tax. The government has pledged in the 2011 budget one billion additional revenues from the increase in the 11% VAT to 12% or 13%. In this case, foodstuffs and medicines that were taxed with this rate so far will be transferred to a lower group and their VAT will be 5.5 %. Other goods from the average group considered as luxury will be transferred to the main VAT rate of 23%.

The same source from the Ministry of Finance said that the measures taken by the government have one main goal and it is reducing the budget deficit in absolute amount. The government was accused of resorting to new tax increases and further cuts of jobs in public administration. The representative of the government financial experts replied that there is no other way to reduce the gaps in the state budget. "Cutting costs and raising taxes (where possible) is the only way to reduce the deficit," insisted the government official. He said that once the government has collected for nine months € 36 billion revenues of the € 52 billion pledged by the end of the year the goals set at the beginning of the year will be achieved. This confidence is based on the collection of revenue from tax on vehicles that will go into the government pockets in December and the subsequent payments following the tax amnesty. The deadline for registration of sole proprietors and companies for the tax amnesty is November 12, when the payment of the amounts due will start.

According to information provided by sources close to the Ministry of Finance, a reform is being implemented in regional tax offices that will increase the efficiency of the inspection bodies. About 2500 yacht owners (individuals and legal entities) and other luxuries will be inspected for the accuracy of the data they have provided in their tax returns for the previous fiscal period. However, public opinion in Greece is still questioning the effectiveness of the tax authorities and finds the increase in the tax burden on ordinary taxpayers unfair as the informal economy is still out of control.

Last but not least are the government plans to drive the privatization processes, including both various state enterprises and recommendations for the future of commercial banks with state share (ATEbank and Agricultural Bank). The formal report containing the recommendations of the international consultants Lazard, HSBC and Deutsche Bank is expected to be presented in late October this year.

Tags: EconomyMarketsCrisis
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