Gov’t, cred­i­tors look to new loans

Mea­sures of at least 4 to 5 bil­lion eu­ros are re­quired to plug ad­di­tional holes in the state bud­get

Kathimerini English - - Business & Finance - BY VAS­SILIS ZIRAS

The prob­lems in the ex­e­cu­tion of this year’s bud­get are lead­ing to the like­li­hood of a new bailout pack­age and a new mem­o­ran­dum with more re­al­is­tic fis­cal tar­gets.

Pre­lim­i­nary es­ti­mates from the data col­lected by Greece’s cred­i­tors whose rep­re­sen­ta­tives have been car­ry­ing out in­spec­tions in Athens since Tues­day sug­gest that the bud­get short­fall is far greater than the 3 bil­lion eu­ros that the gov­ern­ment had been pre­dict­ing un­til re­cently. Sources speak of ad­di­tional mea­sures re­quired to plug a 4-to 5-bil­lion-euro hole.

Kathimerini un­der­stands that Fi­nance Min­is­ter Gior­gos Pa­pa­con­stanti­nou has al­ready em­barked on a se­ries of talks with the eu­ro­zone, the Euro­pean Cen­tral Bank and the In­ter­na­tional Mon­e­tary Fund about a re­vi­sion to the fis­cal tar­get for 2011 since the mon­i­tor­ing com­mit­tee vis­ited in Fe­bru­ary, when the in­ter­na­tional ex­perts had called for ad­di­tional mea­sures to bring in 1.8 bil­lion eu­ros. The short­fall was smaller then and could have eas­ily been cov­ered by trea­sury bill is­sues.

How­ever, at the time the pre­vail­ing thought was to wait and see how things would de­velop at the Euro­pean level, mainly as far as Por­tu­gal was con­cerned, while there were also ex­pec­ta­tions of a re­bound in rev­enues.

The con­sid­er­able prob­lems in the ex­e­cu­tion of the bud­get are at­trib­uted to the rev­enues short­fall – they are not ex­pected to re­bound any­more as the re­or­ga­ni­za­tion of the tax mech­a­nism has been de­layed and re­ces­sion is mak­ing things worse – as well as to the needs of pub­lic bod­ies such as the Man­power Or­ga­ni­za­tion (OAED) and the So­cial Se­cu­rity Foun­da­tion (IKA), which re­quire ad­di­tional credit of some 1.2 bil­lion eu­ros. Other so­cial se­cu­rity funds are also cer­tain to re­quire more fund­ing soon.

This di­ver­gence from the 2011 bud­get is such that it can­not be off­set any­more with­out a dras­tic cut in ex­pen­di­ture that would be po­lit­i­cally and so­cially un­bear­able and would pro­long the re­ces­sion on the eco­nomic front.

The tar­get of re­duc­ing the bud­get deficit to 17 bil­lion eu­ros now seems im­pos­si­ble, while the hole in state cof­fers is so big that the coun­try will need ad­di­tional loans be­yond the orig­i­nal 100-bil­lion-euro pack­age. This is why Greece’s cred­i­tors and the gov­ern­ment will likely start dis­cussing a new pack­age as a bet­ter so­lu­tion for Greece’s prob­lems, ad­justed to the re­al­ity of the coun­try’s fi­nances this year.

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