Bloomberg
May 13, 2011
Greece’s budget deficit is forecast to exceed the limit under a European Union-led bailout, reinforcing calls for a new rescue package to stave off default as EU finance ministers prepare to meet next week.
The fiscal shortfall is seen at 9.5 percent of gross domestic product in 2011, the European Commission in Brussels said in an e-mailed statement today. That exceeds the 7.4 percent target adopted by the EU and International Monetary Fund in reviews of last year’s 110 billion-euro ($157 billion) rescue.
Greece’s public debt, already the euro area’s biggest relative to economic output, is forecast to reach 158 percent of GDP this year. The economy grew 0.8 percent in the first quarter from the previous period, aiding Prime Minister George Papandreou’s efforts to stick to an austerity program imposed under the existing aid deal that has already led to two general strikes this year.
“Greece is facing a very serious situation,” EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels. “Because of weaker growth last year than expected and the burden of that, there’s a need to take additional measures of fiscal consolidation.”
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