Wednesday, July 14, 2010

Don't Count on Greek Tragedy

Wall Street Journal
July 13, 2010

Perhaps Greece's budget situation isn't such a tragedy after all. Sure, the government's ambitious plans to rein in a runaway 13.6% deficit are subject to execution risks. But within the shelter provided by the €110 billion ($138.52 billion) International Monetary Fund and euro-zone funding package, there are some encouraging signs.

In the first half, Greece's budget deficit came in at €9.6 billion, down 46% from the same period of 2009, the Finance Ministry said this week. Revenues rose 7.2%, while spending fell by 12.8%. Revenue growth remains below target, but not all of the revenue measures have come into effect yet and spending cuts are well ahead. That continues the positive trend identified by the European Commission, IMF and European Central Bank in June's interim review, and makes this year's deficit target of 8.1% achievable.

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