Athens News Agency: News in English, 07-05-07

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From: The Athens News Agency at <http://www.ana.gr/>

CONTENTS

[01] PM congratulates Sarkozy on election victory

[02] EU to recommend May 16 Greece's exit from EDP

[01] PM congratulates Sarkozy on election victory

Karamanlis noted the warm relations between Greece and France, as well as the close ties between Greece's ruling New Democracy party and France's conservative UMP party, which is headed by Sarkozy, as well as his own warm relations with the new French president-elect.

The Greek prime minister expressed his conviction that "these traditionally close ties of cooperation and friendship between our two countries will be strengthened further and we will have an opportunity to work together on a bilateral level but also within the European Union".

Asked how Athens views Sarkozy's position on Turkey, meanwhile, government spokesman Theodoros Roussopoulos stressed that the government had repeatedly stated its position regarding Turkey's European prospects.

[02] EU to recommend May 16 Greece's exit from EDP

Speaking to reporters, presenting the EU executive's spring economic forecasts, Almunia said the Commission expected Greece's fiscal deficit to remain below the 3.0 pct limit for both this year and 2008. The EU Commissioner noted, however, that Greece and Italy should make more efforts to reduce their public debt.

Greece's general government deficit outcome for 2006 was 2.6 percent of GDP, including one-off revenues of 0.6 percentage point of GDP, the Commission said in its spring economic forecasts for Greece. The report said the Greek deficit should decline by 1/4 percentage point of GDP to 2.4 pct this year.

Economic growth is projected to accelerate over the forecast horizon, with real GDP growing at around 3-3/4 in both 2007 and 2008. It is the first time since 2004, when the Commission begun excessive deficit procedures against the country, that the Commission forecasts a fiscal deficit below the 3.0 pct Maastricht Treaty for three successive years. The Commission noted that this estimates were based on the old GDP series and not on the revised GDP data reported by the Greek authorities in the EDP notification tables in April 2007. The Commission stressed that Eurostat was still undergoing complete examination of revised GDP figures. "Should the Eurostat examination confirm in full the 26 percent upward revision of nominal GDP figures, the denominator effect of a higher GDP would reduce the deficit just below 2.0 pct. However, the revision would lead to a permanent increase of Greece's contribution to the EU budget and this would result in a deficit close to, but below, 3.0 pct of GDP," the report said.

The Commission said Greece's public debt was 104.6 pct of GDP last year and said it expected the debt to ease to 100.9 pct in 2007 and to 97.6 pct in 2008. Greek inflation stood at 3.3 pct in 2006 and was forecast to ease to 3.2 pct this year and 3.1 pct in 2008, while unemployment is projected to fall to 8.5 pct in 2007 and 8.1 pct in 2008, from 8.9 pct last year.

The Commission said a decline of the fiscal deficit to 2.6 pct of GDP in 2006 reflected payments and deferred payments by banks in exchange of the assumption by social security of pension commitments. For 2007, the deficit should decline by 0.25 pct to 2.4 pct of GDP, including one-off revenues of 0.5 pct. Total expenditures are projected to decrease by around 0.5 pct of GDP, mainly driven by lower interest expenditure, public consumption and investment. The structural balance would improve by 0.5 pct of GDP. Under the assumption of unchanged policies, the 2008 deficit would be about 2-3/4 pct of GDP.

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