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GreekReporter.comGreek NewsEconomy2011 Budget Deficit Seen At Around 10% Of GDP

2011 Budget Deficit Seen At Around 10% Of GDP

The Greek government΄s budget deficit is expected to be equivalent to around 10% of gross domestic product this year, above an already revised target of around 9% of GDP, a senior government official said Wednesday.
He added that the economy could shrink by more than 6% this year, against a government estimate of 5.5%.
“We have a serious problem with tax collection as many people can΄t afford to pay the higher taxes,” said the official, who has direct knowledge of the government΄s economic planning.
“In 2012 we will be entering a fifth straight year of recession and there doubts we΄ll be returning to growth in 2013,” he said. “There is no growth, the banks ain΄t lending, unemployment is rising and people only spend for food. The market is totally dry. We expect a budget deficit of around 10% this year, while recession could slightly exceed 6%.”
Despite almost two years of austerity measures and tough oversight from the so-called troika–the European Commission, the International Monetary Fund and the European Central Bank– Greece has repeatedly failed to meet its budget deficit targets.
Athens got a EUR110 billion bailout loan from its European Union partners and the IMF last year in return for deep spending cuts, structural reforms and higher taxes intended to cut its deficit and bring its debt level–presently around 160% of GDP–back to sustainable levels.
But the cuts, and delays in pushing through reforms such as privatizations and tackling corruption, have led to an unprecedented recession, with no end in sight.
“The GDP forecast for 2012 is a shrinkage of 2.8%, the fifth straight year of negative growth. This has never happened before in a developed world country,” the official said.
The IMF said in a report Tuesday that it expects the economy to contract by 6% this year and up to 3% in 2012. The government has said it expects a return to “anemic growth,” in 2013.
(source: Dow Jones)

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