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Greek fires may cost 1.2 bln euros
ATHENS (Reuters) - Forest fires which have ravaged Greece for six days may cost the country more than 0.6 percent of GDP, or 1.2 billion euros ($1.6 billion), making the country eligible for European Union aid, the government said on Wednesday.
"I am afraid the total damage from the fires will be more than 0.6 percent of Greece's GDP," Deputy Finance Minister Christos Folias told Reuters. "We have no picture of the (impact) on the budget deficit yet."
Folias said Greece would apply for funds from the European Union's Solidarity Fund, which helps member states reconstruct after major natural disasters.
He pointed out that Greece met the eligibility criteria which state that a country must have suffered damage of either at least 0.6 percent of GDP or more than 3 billion euros.
The EU official in charge of the 1-billion-euro fund, Regional Policy Commissioner Danuta Huebner, is due to travel to Greece to assess the damage.
One EU official said Greece could be in line for a large handout. In 2002, Germany, Austria, the Czech Republic and France shared 728 million euros of EU cash to counter damage from summer floods.
Firefighters said on Wednesday they were gaining the upper hand over widespread forest fires that have killed at least 63 people and left several thousand people homeless.
Greece, targeting a budget deficit of 2.4 percent of GDP this year, has made progress in shoring up its public finances and cutting its budget gap in recent years. It hopes to exit the European Union's excessive deficit procedure this year.
"We have a cushion of about 0.6 percent of GDP before we breach the 3.0 percent budget deficit limit," the minister said. "I hope we will not need to make use of article (104) of the stability pact.
Under this clause, euro zone members may seek an exemption to the 3 percent budget deficit cap citing extraordinary circumstances such as natural disasters.
Greece's 200-billion-euro economy grew at a 4.2 percent annual pace in the second quarter. Folias said the government had no estimate on the potential impact of the fires on economic growth yet.
(Additional reporting by Marcin Grajewski in Brussels)
($1=.7356 Euro)
