Greek PM outlines new steps to cut Olympic-sized debt
AFP , SALONIKA, GREECE
Monday, Sep 13, 2004,Page 12
Squeezed by a swelling public deficit and debt following last month's costly Athens Olympics, the Greek government said on Saturday it would cut defense spending and boost revenue by 1.5 billion euros (US$1.84 billion) in privatization receipts.
"We are proceeding to a new plan of denationalisations that will yield the state around 1.5 billion euros next year," Prime Minister Costas Karamanlis told business leaders in a speech on the sidelines of an international trade fair in Salonika.
The country's deposit-rich postal savings bank will be floated on the Athens stock exchange and a new attempt will be made to sell off debt-ridden Olympic Airlines, Karamanlis said, without identifying any further privatization targets. Defense spending will be cut by 400 million euros by next year and more cuts will follow by 2010, he added.
The Olympics cost Greece around 7 billion euros and helped push the country's public deficit for this year to 5.3 percent of GDP -- way above the 3 percent limit prescribed by the eurozone.
Greece's public debt for this year will reach 112 percent of GDP, Karamanlis said, nearly twice as high as the eurozone's 60 percent target. The European Commission has ordered Greece to spell out budget discipline measures by November.
Karamanlis' conservative government took office in March and immediately revised the previous socialist administration's budget figures which showed Greece well within eurozone limits. He said the socialists had deliberately under-reported Olympics- and defense-related spending.
Original can be seen here
Greek debt spirals after Olympics
Greece is facing a massive budget deficit as it tries to absorb the cost of the Olympic Games.
The expected 7bn euro ($8.6bn; £4.8bn) burden means the national deficit is set to hit 5.3% in 2004, said Prime Minister Costas Karamanlis.
He said the previous government was to blame, for concealing the extent of Greece's economic troubles.
"A large part of Olympic, social and other spending was not written up in the budget," he said.
"The real deficit was not recorded... The public debt exceeds even the most pessimistic of estimations."
Security costs
The Games is set to be the most expensive in the modern Olympics' 100-year history.
Not only did Athens have to sustain the usual cost of trying to outdo previous host cities.
The heightened fears following 9/11 meant that Athens was faced with a bill for security which was five times higher than that of Sydney in 2000.
In addition, much of the building work on facilities was only completed in a last-minute - and expensive - rush, in some cases just hours before the Games began.
The expected 5.3% budget shortfall is almost twice the 3% allowed by the European Union.
Total cumulative debt, Mr Karamanlis said, was as high as 112% of GDP or 184bn euros - or 50,000 euros for each Greek household.
Before March's election, the previous Socialist government had predicted a 1.2% deficit, with total debt of under 100% of GDP.
That was nothing short of deliberately misleading, he said.
"Social policy was done with borrowed cash, military spending did not show up on the budget, debts were created in secret," Mr Karamanlis said in a speech which traditionally sets the economic agenda for the year ahead.
But he said there was hope ahead.
Privatisation, new investment and pro-competitive laws were planned, but there was to be no shock treatment.
Mr Karamanlis promised "consultations, not surprise attacks - dialogue, not confrontation".
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Published: 2004/09/12 11:01:40 GMT
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