Greece budget deficit to sink
Source: Agencies |
November 19, 2011, Saturday
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GREECE yesterday predicted its budget deficit will fall sharply next year and insisted that no fresh austerity measures will be needed to plug a hole in this year's finances.
Submitting the 2012 budget, Finance Minister Evangelos Venizelos said the deficit will shrink from an expected 9 percent of gross domestic product this year to 5.4 percent next year, largely thanks to a debt writedown that is part of Greece's second international bailout agreed on by European leaders last month.
Without the bailout, Greece faces bankruptcy and a possible exit from the euro. "This budget comes during extremely hard international conditions. The attack is now focusing on the hard core of the eurozone," he said.
Venizelos, who kept his job in the new interim coalition government formed last week and led by technocrat Lucas Papademos, said the new debt deal will make the country's national debt "totally sustainable."
The deal includes provisions for banks and other private holders of Greek bonds to write off 50 percent of their Greek debt holdings - potentially cutting the country's debt by 100 billion euros (US$135.76 billion) and cutting the debt-to-GDP ratio to 120 percent by 2020 from an expected 161.7 percent this year. But the details have not yet been worked out.
Greece has been relying on international bailout loans since May 2010 after its borrowing rates ballooned. The country turned to its European partners and the International Monetary Fund, winning an initial 110-billion-euro bailout in return for an austerity package to cut deficits bloated by years of government overspending.
It soon became clear that the rescue loans were not enough, and European leaders agreed on a second deal as part of a package to shore up a debt crisis that's been spreading to bigger economies, such as Italy.
Gripped by a vicious crisis since last year, the Greek government has imposed a series of harsh austerity measures, including salary and pension cuts and increased taxes. But the measures have led to a deep recession, with the economy projected to contract by 5.5 percent of GDP this year, and a further 2.8 percent next year. Unemployment is also steadily increasing, with the jobless figure expected to reach 15.4 percent this year and 17.1 percent in 2012.
Submitting the 2012 budget, Finance Minister Evangelos Venizelos said the deficit will shrink from an expected 9 percent of gross domestic product this year to 5.4 percent next year, largely thanks to a debt writedown that is part of Greece's second international bailout agreed on by European leaders last month.
Without the bailout, Greece faces bankruptcy and a possible exit from the euro. "This budget comes during extremely hard international conditions. The attack is now focusing on the hard core of the eurozone," he said.
Venizelos, who kept his job in the new interim coalition government formed last week and led by technocrat Lucas Papademos, said the new debt deal will make the country's national debt "totally sustainable."
The deal includes provisions for banks and other private holders of Greek bonds to write off 50 percent of their Greek debt holdings - potentially cutting the country's debt by 100 billion euros (US$135.76 billion) and cutting the debt-to-GDP ratio to 120 percent by 2020 from an expected 161.7 percent this year. But the details have not yet been worked out.
Greece has been relying on international bailout loans since May 2010 after its borrowing rates ballooned. The country turned to its European partners and the International Monetary Fund, winning an initial 110-billion-euro bailout in return for an austerity package to cut deficits bloated by years of government overspending.
It soon became clear that the rescue loans were not enough, and European leaders agreed on a second deal as part of a package to shore up a debt crisis that's been spreading to bigger economies, such as Italy.
Gripped by a vicious crisis since last year, the Greek government has imposed a series of harsh austerity measures, including salary and pension cuts and increased taxes. But the measures have led to a deep recession, with the economy projected to contract by 5.5 percent of GDP this year, and a further 2.8 percent next year. Unemployment is also steadily increasing, with the jobless figure expected to reach 15.4 percent this year and 17.1 percent in 2012.
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