Question of the Week: How do you intend to produce a credible plan for bringing the deficit, expected to hit 5.3% this year, below 3%?

Date: 18/11/04

George Alogoskoufis is the finance minister of Greece, charged with convincing his peers that Greece will now present reliable budget figures and reduce the deficit below the Stability and Growth Pact's 3% of gross domestic product (GDP) ceiling.

We asked him: How do you intend to produce a credible plan for bringing the deficit, expected to hit 5.3% this year, below 3%?

Alogoskoufis: Our intention, which is reflected in next year's budget, is to bring the deficit down to 2.8% of GDP and so into line with the Stability Pact, during 2005.

We shall be helped in that by the fact that the expenditure we had to make for the Olympics is non-recurring.

So we shall essentially not be repeating a large part of the expenditures we had this year in preparation for the games. This will save us around 1% of GDP.

We shall get roughly another 1% of GDP from slowing down the rate of growth of other public expenditure through a mixture of further privatization, economizing on interest costs and other revenue measures.

The expenditure savings involve slowing the growth of wages and salaries in the public sector.

But we are not going to be cutting jobs.

Rather we will slow down the growth of employment.

We expect the economy to keep growing by about 3.9% partly through the expansion of tourism and exports and we expect the public sector to grow far less than this.We asked him: How do you intend to produce a credible plan for bringing the deficit, expected to hit 5.3% this year, below 3%?

Alogoskoufis: Our intention, which is reflected in next year's budget, is to bring the deficit down to 2.8% of GDP and so into line with the Stability Pact, during 2005.

We shall be helped in that by the fact that the expenditure we had to make for the Olympics is non-recurring.

So we shall essentially not be repeating a large part of the expenditures we had this year in preparation for the games. This will save us around 1% of GDP.

We shall get roughly another 1% of GDP from slowing down the rate of growth of other public expenditure through a mixture of further privatization, economizing on interest costs and other revenue measures.

The expenditure savings involve slowing the growth of wages and salaries in the public sector.

But we are not going to be cutting jobs.

Rather we will slow down the growth of employment.

We expect the economy to keep growing by about 3.9% partly through the expansion of tourism and exports and we expect the public sector to grow far less than this.

Question answered by George Alogoskoufis, the finance minister of Greece. He is charged with convincing his peers that Greece will now present reliable budget figures and reduce the deficit below the Stability and Growth Pact's 3% of gross domestic product (GDP) ceiling.