Greece needs more austerity to hit targets: forecasts

Greece's budget deficit will not fall below a key euro zone ceiling in 2014 as planned, if the debt-laden country fails to decide additional austerity measures in June, a set of updated forecasts revealed on Friday.
Assuming no more measures are taken, the budget gap will narrow to just 4.2 percent of gross domestic product in 2015 instead of the 1.1 percent assumed under a previous set of forecasts made in June, the financeministry data showed.
The new figures are part of the country's updated mid-term fiscal plan for 2012-2015, which was revised to take into account its deeper-than-expected recession and a debt cut plan agreed by its international lenders last month.
Greece is struggling to meet budget targets as it goes through its fourth year of recession, and needs the next tranche of funds under an ongoing EU/IMF bailout to avoid bankruptcy next month.
Euro zone countries should have budget deficits below 3 percent of GDP, a target Greece still aims to achieve in three years, a senior finance ministry official told Reuters. "We stick to the target to reduce the deficit to below 3 percent by 2015," the official said.
"The revised mid-term plan does not take into account the additional fiscal measures that will be finalized and announced in June," he added.
Greek Finance Minister Evangelos Venizelos said on Wednesday that the country's next government will have to specify new fiscal measures after elections are held early next year.
But the front-runner to win the poll, the conservative New Democracy party, has ruled out any fresh austerity despite backing the broad fiscal targets.
Under the new set of budget forecasts, debt as a percentage of GDP would fall to 125.6 percent in 2015 from about 162 percent this year, assuming the debt reduction plan agreed last month goes ahead.
The bailout is aimed at reducing Greece's debt to 120 percent of GDP by 2020.

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