The Finance Ministry will submit a draft copy of the Growth and Stability Plan to the European Commission today (Monday) which it hopes will help convince investors and officials in Brussels that it can successfully get on top of its growing fiscal problems.
News that Greece’s budget deficit in 2009 will reach 12.7 percent of gross domestic product, some four times higher than January estimates, along with figures showing public debt reaching 300 billion euros have fueled concerns over whether Greece will be the first eurozone member to go bankrupt.
European Union and European Central Bank (ECB) officials are expected to visit Athens this Wednesday to look over details of the growth program with the Greek Finance Ministry and change any details they disagree with.
Prime Minister George Papandreou told reporters last week he is confident the EU and ECB will give Greece the green light on the way it plans to tackle swelling debt and deficit figures.
Finance Minister Giorgos Papaconstantinou has said Greece will reduce the deficit to 8.7 percent of GDP this year but senior government sources have clarified that the targeted deficit cut could be steeper in the final version of the growth plan.
The government will face its first test in capital markets for 2010 in the first half of January. Greece will need to sell almost 5 billion euros of bonds to refinance expiring treasury bills in an auction that will indicate investor sentiment toward Greek state debt after recent downgrades to the country’s ratings by all three major agencies.
On the growth front, the government expects the economy to start expanding in 2011 after two consecutive years of recession, sources added.
The Greek economy, worth about 250 billion euros, is tipped by the stability pact to shrink by 0.3 percent year-on-year in 2010, according to sources.
The job market remained gloomy with jobless figures expected to rise to over 11 percent in 2011 from 10.5 percent this year.