Greece got mixed reviews on its draft 2006 budget on Thursday from top European Union officials, who expressed both concern and praise for the country's efforts to rein in its deficit.
Facing sanctions after years of reporting underestimated budget deficit figures to its EU partners, Greece said on Monday that next year it would lower its deficit to 2.8 percent of GDP, below the EU's 3 percent limit for the first time in 8 years.
EU Monetary Affairs Commissioner Joaquin Almunia told the Greek government late on Wednesday it must do more to meet both its 2005 and 2006 deficit targets and that the EU would keep a close eye on the "worrying" situation.
"For the EU it is of the utmost importance that Greece brings the deficit below 3 percent next year," Almunia told a business audience during a visit to Athens.
But Eurogroup President Jean-Claude Juncker praised Greece on Thursday for acting responsibly in dealing with the problem.
"They are undertaking strong and difficult action... The government is acting in a responsible way and we have to encourage and support that," he told reporters in Athens.
Analysts said the contrasting comments reflected the different approach to problems between the EU's technocrats and politicians.
"It's the Commission's and Almunia's job to be strict critics so that nations comply with the rules," National Bank economist Paul Mylonas told Reuters. "Finance ministers and politicians are more lenient...they could be in the same situation one day."
Greece's 2006 budget hinges on securitisation of uncollected tax debts to the state, a measure that must first by approved by the EU.
Greek Finance Minister George Alogoskoufis said he was confident Brussels would accept the move - which was also undertaken by Portugal in the past - but Almunia did not mention the issue in his speech.
"If Greece's securitisation to help lower the deficit is not approved, then there will need to be a revision of other countries' deficits where the same method was used, Portugal for example,"said Alpha Bank economist Dimitris Maroulis.
Greece angered its EU partners when it revealed it was running budget deficits well above the EU limit for years. In 2004, when it hosted the Olympics, its fiscal gap ballooned to 6.6 percent of Gross Domestic Product (GDP).
"The situation of (Greek) public finances is still worrying and the insufficient reforms are exposing the country to the growing risks arising from ageing and globalisation," the commissioner said.
His strict comments prompted one Greek daily to post a banner, front page headline: "Typhoon Almunia strikes Alogoskoufis".
But Juncker offered some relief to the centre-right government which came to power in March 2004, saying that after meetings with Alogoskoufis and Prime Minister Costas Karamanlis, he was confident they were on the right track.
"I have to applaud the efforts," he said.
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