EURO ZONE policymakers piled pressure on Greece yesterday to drive through more austerity measures after bleak economic forecasts showed the debt-choked country would miss fiscal targets without further reforms.
Athens would fall short of its 2011 deficit target by two percentage points if it left policies unchanged, the European Commission said ahead of an EU-IMF inspection of Greece.
“Because of weaker than expected growth last year, plus some fiscal slippages, there is need to take additional measures in fiscal consolidation still this year,” EU economic and monetary affairs commissioner Olli Rehn told a news conference. “How much will depend on the assessment of our mission currently in Athens.”
European Central Bank governing council member Ewald Nowotny said Greece was not meeting the terms of the €110 billion bailout which saved it from bankruptcy last year, giving the first public confirmation that the ongoing EU-IMF inspection team has found shortcomings.
“Greece has apparently not fulfilled the conditions sufficiently of late. The issue of privatisations will be the most sensitive point here,” Austria’s Kronen Zeitung quoted Mr Nowotny as saying.
Without a shift Greek debt would rise to 157.7 per cent of gross domestic product this year and to 166.1 per cent in 2012, rather than the 145.2 and 148.8 per cent envisaged by the EU-IMF plan, the EU executive said in its twice-yearly forecasts.
It would also have a budget deficit of 9.5 per cent of GDP this year rather than the 7.6 per cent it was targeting.
Greece received a rare piece of good news yesterday with its first positive quarterly GDP reading since the end of 2009, though that followed a vicious 2.8 per cent contraction in the last quarter of 2010.
Analysts said it did not show a change in trend and the commission forecast a deeper full-year economic shrinkage for 2011 of 3.5 per cent from a previous 3 per cent projection.
Greek prime minister George Papandreou said finger pointing in the euro zone was creating an atmosphere of gloom which would force Greece to pay ever higher borrowing rates.
“Even the IMF today is saying that our debt is sustainable, we can manage our debt without restructuring. However, the markets are pounding us incessantly, the media are predicting a doomsday, and this is promoting a culture of fear,” he told a meeting of centre-left politicians in Oslo. - (Reuters)
