Greek Finance Minister George Papaconstantinou will reveal today how he plans to offset lagging revenue growth in his 2011 budget to trim the European Union’s second-biggest budget gap and allow the country to resume borrowing in bond markets.
Papaconstantinou presents a proposal that seeks to achieve the deficit targets he pledged to the EU in return for 110 billion euros ($150 billion) of emergency loans needed to avert default, while not extending the two-year recession. In the first eight months, revenue rose 3.4 percent, trailing the 13.7 percent pace Greece pledged to secure the EU-led rescue. The plan will be released after a Cabinet meeting at 12:30 in Athens.
“It’s a very challenging budget,” said Nicholas Magginas, an economist at National Bank of Greece SA, the country’s largest lender. “It is increasingly likely that a less optimistic projection for revenue will be adopted. There will also be pressure to even that out with more spending cuts, which is the certain thing.”
Prime Minister George Papandreou, elected a year ago today, is trying to show investors that Greece can stay the course of a deficit-cutting drive that has slashed wages and pensions and led to street protests. Greece is seeking to return to bond markets next year after investor concerns that the country would default on 300 billion euros of debt led to a surge in borrowing costs and prompted the EU-led rescue.
Good luck with that.
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