Greece to miss 2011 budget targets, minister warns
(ATHENS) - Debt-stricken Greece risks missing the 2011 budget targets laid down in its international debt bailout because of a severe recession made worse by austerity measures, the finance minister warned Friday.
"We do not want to renegotiate" the austerity measures demanded by the European Union and the International Fund, Evangelos Venizelos told parliament.
However, "we would like to review the macroeconomic data (with them) ... and evaluate the budget objectives" in view a deeper-than-expected recession, the minister said.
Venizelos said the government now expected the economy to shrink more than 4.5 percent in 2011, up from the 3.5 percent previously forecast.
"This does not mean that we are letting up, that we are lowering our objectives. We have to apply the measures we voted so that we are as close as possible to our objectives," he added.
EU, IMF and European Central Bank officials are currently conducting a regular audit of Greece's finances to determine whether it will receive next month a sixth tranche of funds under its May 2010 110-billion-euro bailout.
Venizelos dismissed Greek media reports that claimed Athens was seeking to "renegotiate" the timetable and targets of Greece's arduous recovery plan which includes a hugely controversial 50 billion euros privatisation programme.
The privatisation target also has to be met, the minister added.
In June, the government forecast a 2011 deficit of 16.68 billion euros ($24.2 billion), or 7.4 percent of Gross Domestic Product but latest figures show the first half shortfall already at some 14.69 billion euros.
Venizelos also told parliament he had notified 57 of his international counterparts of the terms of a private sector debt rollover included in the country's second rescue programme agreed at a eurozone summit in July.
The July summit approved 109 billion euros in fresh aid for Athens plus another 50 billion from private sector groups, mainly banks and insurance companies, who agreed to rollover some of their Greek government bonds.
The finance minister said the accord should be concluded by October 20.
Greek press agency ANA reported that Venizelos also contacted private holders of Greek debt directly, giving them until September 9 to say whether they would participate in the debt rollover.
A government statement warned that if 90 percent of eligible bonds coming to maturity in 2020 were not included in the rollover, Greece "would not proceed with the transaction" -- a move which could jeopardise the whole bailout.
Greek accumulated public debt totals around 350 billion euros or 155 percent of GDP, way above the EU limit of 60 percent and at a level which many analysts believe will mean it cannot never be repaid in full.
Top European finance officials, known as the euro working group, meanwhile planned to hold a conference call Friday over a dispute about a demand by Finland for collateral to back its part of the second bailout, a source said.
Helsinki and Athens hammered out a deal last week under which Greece would provide Finland with cash collateral, but some eurozone members slammed it as a dangerous precedent that could threaten the rescue package as a whole.
Mounting public opposition to bailouts and success by the anti-EU Finns Party in elections in April forced even the traditionally pro-European ruling Social Democrats to adopt a tougher stance.
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