ATHENS (MNI) – Greece is on track to meet its 2010 deficit target
and no additional austerity measures are needed for this year, finance
minister George Papaconstantinou said at a press conference on Monday.

He added however, that certain risks remain. He also said he was
“looking forward to returning for funding [the markets] in 2011.”

Papaconstantinou said GDP may contract less than the 4% that is
forecast for this year. European Commission officials have yet to
express the same optimism about a less-than-expected recession. They are
expected to visit Athens for two weeks in late July to make their final
inspections before publishing the first joint official evaluation of the
Greek budget by Commission, the IMF and the ECB.

Based on this evaluation, Greece would get the green light for
receiving the second EMU/IMF loan installment of about 9 billion euros
in September.

Papaconstantinou said that the second half of the year will be
“heavy” for Greek citizens, because austerity measures worth 2 billion
euros will be implemented, including a planned VAT increase from 21% to
23% (the second 2-point increase this year); increases in indirect taxes
on tobacco and other items; and collection of a special tax on
high-value real estate.

At the same, Greeks will suffer the consequences of sharp cuts in
expenditures on salaries, bonuses, benefits and pensions.

Speaking about the lower-than-expected government revenues, the
minister expressed optimism that the targets would be met by the end of
the year and the deficit would be reduced to 8.1% of GDP, from 13.6%
last year, as Greece has promised. He added that it is “natural for the
revenue rate to slow down given the magnitude of the recession, but
there is no black hole in revenues.”

Papaconstantinou said the rate of revenue increase in the first
half of this year stands at 7.1% y/y, compared with an 11% target. In
the next few days the ministry will issue official data for the
execution of the budget for the first six months of the year, he said.

Meanwhile, the two big public and private workers union umbrellas,
GSEE and ADEDY, announced a new 24-hour strike on Thursday, the day the
Greek parliament will vote on the controversial social security/pension
reform bill.

Although the Government enjoys a majority of 7 seats, there are a
few government MPs who appear reluctant to vote in favor of the bill.
The legislation includes harsh measures that many people consider
anti-social, and several unions have already announced they will take it
to Court and claim that certain sections are unconstitutional.

According to a written statement by the Finance Ministry, there are
six principal risks to execution of Greece’s budget plan. They are:

1. The legal process through which complex measures must be passed
on strict timetables is slow.

2. Overly bureaucratic and slow reactions in the implementation of
restructuring policies.

3. Higher than targeted state spending, especially with regard to
certain benefits.

4. Higher than targeted general government spending, especially on
hospitals and municipal elections.

5. The total public deficit and debt might be higher than targeted
because debt and operating shortfalls of public companies will be
incorporated in the state budget.

6. There is still no clear idea of how many public employees
currently work in Greece. It is therefore unclear how public sector
layoffs and hiring will affect the state budget.

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