Greece bumps debt forecasts up in revised budget
Greece's Prime Minister Antonis Samaras, right, speaks with Greece's Finance Minister Yannis Stournaras during a vote on a privatization bill at the Greek parliament in Athens, Wednesday, Oct. 31, 2012. (AP / Thanassis Stavrakis)
Published Wednesday, October 31, 2012 7:01AM EDT
Last Updated Wednesday, October 31, 2012 7:38AM EDT
ATHENS, Greece -- The Greek government raised its debt and deficit forecasts for 2013 in a revised budget submitted to Parliament on Wednesday, highlighting the country's monumental struggle in turning around its public finances.
Greece's general government debt is projected to rise to 189.1 per cent of gross domestic product in 2013, above the 182.5 per cent predicted in the preliminary draft submitted at the start of the month. That's up from 175.6 per cent forecast for this year.
The revised figures projected the government deficit at 5.2 per cent of GDP, up from 4.2 per cent predicted in the preliminary draft of the budget -- but still an improvement from the 6.6 per cent predicted for this year.
The recession, which will head into its sixth year, will be deeper than the 3.8 per cent contraction the preliminary draft had predicted, with the new figures estimating the economy will shrink by 4.5 per cent.
Unemployment is projected at 22.8 per cent next year, marginally higher than the 22.4 per cent predicted for 2012. Greece registered record unemployment in July this year, with the jobless rate reaching 25.1 per cent. National debt will stand at (EURO)346.2 billion, slightly higher than this year's (EURO)340.6 billion, the revised budget showed.
Greece has been relying on the bailout funds since May 2010. Without them, it will be unable to pay its debts or continue paying salaries and pensions, leading to a messy default that would threaten its position in the 17-nation bloc that uses the euro as its currency.
The government has been struggling for months to agree with its international creditors on a new package of austerity measures worth (EURO)13.5 billion ($17.4 billion) for 2013-14. The negotiations have also revealed cracks in the governing coalition, with the Democratic Left and the Socialists raising objections.
Finance Minister Yannis Stournaras submitted the revised figures 2013 budget figures just before lawmakers began voting on a privatization bill that will test the country's fractious governing coalition.
The bill gives the government more power to privatize public utilities, but has faced growing dissent from lawmakers among the Socialists and Democratic Left, the two junior partners in the conservative-led coalition formed after June elections.
The country's two largest labour unions are to hold a rally in the evening to protest savings measures in the budget, while journalists have walked off the job at the start of rolling 24-hour strikes to protest austerity plans that will affect their healthcare funds.
The strike pulled all television and news broadcasts off the air, while news websites were not being updated and Thursday's newspapers would not be published.
The privatization bill is among reforms required as part of Greece's international bailout agreements, under which the cash-strapped country receives billions of euros in rescue loans from other eurozone countries and the International Monetary Fund, on condition that it imposes austerity measures to reduce its runaway debt and budget deficit.
Prime Minister Antonis Samaras said on Tuesday that the negotiations were over. Voting on the bill has been delayed by another week, and Samaras warned of chaos if it did not pass.
The package of austerity measures is essential for Greece to receive a massive installment of bailout loans, worth (EURO)31 billion. Without it, Samaras has warned that the country runs out of its euro reserves on Nov. 16.