By Harry Papachristou
ATHENS Feb 8 Greece will cut its budget deficit
this year by more than expected after securing debt relief, but
will need to bridge a 2.5 billion euro gap to meet its long-term
fiscal targets, new budget projections showed.
In an updated 2013-16 medium-term budget plan submitted to
parliament on Friday, Athens cut its 2013 deficit target to 4.3
percent of GDP, from 5.5 percent in a projection made in
October, and down from 6.6 percent in 2012.
The updated plan takes into account debt relief measures
Greece agreed with the European Union and the International
Monetary Fund in December to keep its bailout on track, averting
a chaotic bankruptcy and potential exit from the euro zone.
But the December deal also left unfinished business,
obliging Athens to spell out additional savings of 2 billion-4
billion euros for 2015-2016 to hit a primary budget surplus of
4.5 percent of GDP in 2016 as agreed with its lenders.
Friday's projections showed Athens will need savings of 2.5
billion euros to achieve this - the lower end of the 2 billion-4
billion range - as it expects to run a primary surplus for 2016
of only 6.35 billion euros or 3.2 percent of GDP. That falls
short of the 8.88 billion euro target agreed with lenders.
A primary budget surplus excludes debt payments.
Facing public discontent, strikes and the rise of
anti-bailout parties, Greece's fragile coalition government has
rejected any new austerity measures, betting instead on a
stronger-than-expected recovery and targeted spending cuts to
meet its goals.
"The government believes ... that with the emphasis it will
place on structural measures and growth initiatives, it will
cover the small fiscal adjustment that might result in 2015-16,"
the updated plan said.
Under the mid-term budget plan, Athens sees the economy
returning to growth in 2014, with a 0.2 percent expansion,
accelerating to 2.5 percent in 2015 and 3.5 percent in 2016.
INDUSTRY OUTPUT SHRINKS
President Karolos Papoulias, echoing calls by several
government officials, said this week that no new austerity
measures should be introduced.
"The Greek people can't take it any more," Papoulias told
Peer Steinbrueck, who will stand in this year's German election
against Chancellor Angela Merkel, in Athens.
Greece already plans to impose more than 13 billion euros of
austerity measures in 2013-2014, which are expected to keep the
country in recession for a sixth consecutive year in 2013.
The economy is expected to have shrunk by almost a quarter
over 2008-2013, partly as a result of austerity imposed under
Greece's EU/IMF bailout.
Unemployment hit a record high 26.8 percent in October, the
highest in the euro area, fuelling a wave of strikes. Support
for fringe parties such as the ultra-right, anti-immigrant
"Golden Dawn" has risen as the economy and job prospects have
Industrial production data released on Friday confirmed the
gloom, showing output shrank by 3.2 percent in 2012 and has
contracted by a quarter since 2008.
Prices are still climbing even though households' real
disposable income has fallen by almost a third since the debt
crisis began in 2009.
The inflation rate stood at 0.2 percent in January, easing
from 0.8 percent in December, ELSTAT said on Friday.