The Greek government is determined to keep fiscal policy away from petty politics, Economy and Finance Minister George Alogoskoufis said.

Speaking to reporters, during a news conference to present the Greek economy’s current developments and prospects, the Greek minister said the economy was progressing positively, justifying the government’s expectations. Alogoskoufis said the country’s fiscal deficit would fall to 2.6 pct of GDP this year and reiterated that efforts to further cut the deficit would continue with the aim to achieve a balanced or slightly surplus budget.

The Greek minister said the government has achieved to cut public spending, increase public revenues, combating tax-evasion and restructuring the economy. He sent a message to all directions that the economy’s good course would not lead to complacency since the government’s target was to cut the fiscal deficit to below 1.7 pct of GDP by 2008. Alogoskoufis acknowledged there were still big problems with tax evasion in the country but noted that budget revenues were increasing at a satisfactory rate, while he noted that finance ministry agencies were intensifying inspections to ensure timely payment of VAT.

The minister stressed that inspections would be carried out with transparency and with respect to citizens. “There can’t be any abuse of power,” he said. Regular revenues rose 8.0 pct in the first six months of 2006, exceeding a budget target for a growth rate of 6.5 pct, while net revenues were up 11.4 pct from a target of 10.3 pct over the same period. Alogoskoufis said government measures have achieved in containing overspending in the public sector and said that budget spending were up 0.3 pct so far this year, reflecting lower payment on interest rates. Handouts in a Public Investments Program currently total 2.448 billion euros, while revenues total 1.73 billion euros. “Fiscal restructuring efforts will continue and intensify in the second half of 2006”, Alogoskoufis said, noting that there were no room for higher spending this year.

Greece’s public debt fell to 107.8 pct of GDP in 2005 from 109.3 pct in 2004 and was down to 104.8 pct so far this year. Greek citizens’ Gross Domestic Product in purchasing power units rose to 77.3 pct of the EU average from 75.5 pct in 2004 and it is expected to reach 80 percent by 2007. Alogoskoufis also reported improvement in the domestic employment market. The unemployment rate fell to 9.7 pct of the workforce in the first three months of 2006, from 10.4 pct in 2005 and 11.2 pct in 2004, while real wages rose by 2.8 pct in 2004, and 2.9 pct in 2005.