Still room for consolidation
Bond spreads under pressure
FACED WITH A huge revision of its public finance accounts that has earned it praise for transparency and scorn for massaging its statistics in the past, Greece now has no option but to pursue a more restrictive fiscal policy to avoid putting its credit rating, recently cut by Standard & Poor's, under renewed downward pressure.
"The reduction of the budget deficit is paramount in 2005 but even more important for the Greek government is to ensure it is sustainable," says Giovanni Zanni, an economist at CSFB in London.
Burdened by spending overruns related to Greece's hosting of the Olympic Games and revenue slippage that is not uncommon in an election year, the budget deficit is expected to have widened to 5.3% of GDP or more in 2004 compared with a 1.2% forecast. The public debt-to-GDP ratio is expected to reach 112%. The...
