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Minister of Finance has a moderate standpoint regarding the IMF participation in the rescue plan

21 April 2010 / 08:04:57  GRReporter
2467 reads

Victoria Mindova

"I do not demonize nor am I enthusiastic about the participation of the International Monetary Fund in the plan for assistance to Greece," said Minister of Finance George Papakonstantinou at a meeting with journalists. He explained that the government's preference has always been to find a European solution to the financial problems of the country. Following the vote on the plan for bilateral aid, however, the goal of the Greek government is to try and deal with the internal financial problems of Greece alone and in particular with issues of public credit. If this proves too hard for the country because of the excessively high interest on the ten-year Greek government bonds, the bilateral survival mechanism will be activated. The minister noted that Greece will have no problem with government credits, regardless of the delay of bilateral negotiations between government representatives and the International Monetary Fund. 

George Papakonstantinou expressed "reasonable optimism" on the 2010 budget execution. Regardless of the extra stringent financial constraints, government expenditure for the first three months of this year has decreased by 10% while revenues have increased by only 8%. Despite promises to control squander, public employees still received their full salaries during the Easter holidays, and tax departments have failed in collecting the amounts due by the beginning of the year. These are the reasons to reduce the expected performance of the objectives of the new government. To cope with the situation, the Ministry of Finance decided to establish control groups, which will monitor the implementation of the budget of each ministry. They will have two representatives from the five largest international audit firms that will oversee the implementation of the monthly budgets of the ministries and the larger public institutions such as insurance funds and large hospitals. 

Finance Minister Grorgios Papakonstantinou announced that the Government will restructure the public administration system and prepare a final version of the bill to increase the average retirement age. Results from the first quarter show that the government deficit has decreased by 39.2% compared to the same period last year. In absolute terms, the state has saved about €4.3 billion since the introduction of the emergency economic measures from the beginning of the year. If this trend continues, the Ministry of Finances estimated that by the end of 2010 Greece will be able to carry out the stability and development program, which aims to reduce total government deficit to 8 percent of GDP. 

According to data from the Ministry of Finance for 2005-2008, the total value of government expenditure has increased by 35% without affecting increases in public investment. As benchmarks for squander in public sector, the Minister presented a scale of cost increases in other EU countries. In Germany, for the same period increased government expenditure was only 4%, France 10% and the average of this indicator for the Eurozone countries is 12%.

Tags: Greece economy IMF EU EC eurozone
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