FinMin comments on 2012 draft budget, fiscal targets

Greek government vice president and finance minister Evangelos Venizelos said on Monday that the draft 2012 budget tabled earlier in the day in parliament was within the context that has been agreed with the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) 'troika', adding that it is supported by the package of measures that have already been announced and will be passed by parliament before the end of October.

    Venizelos added that the measures ensure achievement of the 2012 targets.

    According to Venizelos, the budget winds up a closely-packed and difficult effort for fiscal adjustment, which from a primary deficit of 24 billion euros in 2009 will reach a 3.2 billion euros primary surplus in 2012, which translates into a primary surplus of 1.5 percent of GDP and a fiscal deficit of 14.65 billion euros.

    The minister said that the new draft budget fully makes up for the 0.7 percent of GDP shortfall in the 2011 budget, which is attributed by the finance ministry chiefly to a deeper than anticipated recession in 2011, which was at -5.5 percent of GDP against an initial forecast of -3.8 percent in June this year.

    According to Venizelos, the new macroeconomic conditions did not allow for covering that 0.7 percent of GDP by the end of 2011 and therefore, in agreement with the troika, the fiscal targets of 2011 and 2012 were dealt with in a combined way so that by the end of 2012 all the fiscal targets will have been met, as set out as an absolute figure in the Medium-Term Fiscal Adjustment Programme.

    Venizelos warned that any other impression given that does not take into consideration the difficult macroeconomic conditions, the fiscal achievements of the two past years and all that has been agreed with the troika "does an immense injustice to this immense effort by the Greek people".

    The minister further said that the fiscal adjustment, together with the fulfillment of the commitments the country has undertaken towards its institutional partners for a determined advancement of the structural changes, create the conditions for full implementation of the decisions taken at the July 21 eurozone summit with respect to Greece.

    "In close cooperation with the troika and our institutional partners, we are trying to change the status quo, to protect our country fiscally and financially, to create the prerequisites for a new development model," he said, adding that "the most crucial and important thing we have to do to return to positive growth rates, with all that entails for the prospects of the country and its citizens, and especially the youth, is to achieve our fiscal and structural targets and prove internationally our determination, unity and consistency," Venizelos concluded.

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