Greece is weathering the financial and credit crisis better than its eurozone peers but there is little room for tax relief to cushion the blow, Finance Minister George Alogoskoufis said on Monday. "The real economy in Greece seems more resilient than other euro zone countries but we have much smaller margins for fiscal flexibility because of the country's high public debt," Alogoskoufis told reporters.
With a budget deficit close to the European Union's 3.0 percent limit, Greece must stay the course towards a balanced budget by 2010, he said. Greece's economy, about 2.5 percent of the eurozone, grew at an annual 3.5 percent clip in the second quarter, slowing from 3.6 percent in the first three months and 4.0 percent last year.
Asked whether last year's 2.9 percent of GDP fiscal gap might be revised upwards following ongoing talks with Eurostat, the minister said: "Even in the event of revised 2007 data, this will not lead to a permanent breach of the Growth and Stability pact's limit." The government is aiming to shrink the fiscal gap to 1.6 percent of GDP this year. But weak budget revenues so far have forced it to take tax measures to shore up the intake.
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