Friday, August 5, 2011

'Greece close to missing deficit targets'

Greek Finance Minister Giorgos Papakonstantinou

Source: Press TV

Greece is nearing failure to reduce this year's deficit in exchange for the two gigantic bailouts it has received, despite agreement with the European Union and the International Monetary Fund (IMF).

The Greek deficit has risen to 14.69 euros mainly because of the county's health and social fund debt, marking the depth of Greece's economic turmoil, AFP quoted Greek Finance Minister Giorgos Papakonstantinou as saying on Thursday.

Since last year, the EU and the IMF have granted Greece two rescue packages worth over 269 billion euros (over 380 billion dollars), in return for tough austerity measures and de-regulations within different labor sectors.

Greece agreed with creditors on a public deficit of 16.68 billion euros (about 23. 5 billion dollars) by the end of 2011, or 7.4 percent of output.

Total costs in Greece were nearly 65 billion euros in the first half of the year compared to 54.8 billion euros a month earlier, while state revenue increased from 42.2 billion to 50.3 billion euros.

Due to the “worse-than-expected recession,” Greece has already missed its goals to bring its deficit down to even near-desirable levels, Greek officials say.

Now it has come to local councils, hospitals, social security funds, and other organizations providing public service to suffer from the tough measures of the Greek government's spending cuts policy, in addition to the implementation of higher taxes and sell-offs, the austerity plan that aims at cutting over 28 billion euros (40 billion dollars).

Moody's credit rating agency has "downgraded Greece's local and foreign currency bond ratings to 'Ca' from 'Caa1' and has assigned a developing outlook to the ratings," the agency said in a statement on 25 July.

"The announced EU program along with the Institute of International Finance's statement implies that the probability of a distressed exchange, and hence a default, on Greek government bonds is virtually 100 percent," according to the statement.

Concerns are mounting in Europe over the possibility of a Greek-style financial crisis as angry protestors in Greece have many times taken to the streets in huge numbers, mainly claiming that the government's austerity measures affect the country's lower-income families the worst.

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