May 14, 2011
Greece's wide budget deficit will decline only slightly this year and barely at all in 2012, according to new projections Friday from the European Union's executive arm, increasing the chance that the indebted nation will need a fresh bailout to get it through next year.
The figures provide further evidence that Greece is veering seriously from the path of severe budget discipline that the EU has insisted is essential for the country to repair its government finances and regain access to private borrowing.
Greece is now being kept afloat by bailout money from euro-zone countries and the International Monetary Fund.
In a report released Friday, the European Commission said Greece's budget deficit this year will be €21.1 billion ($30 billion), or 9.5% of its gross domestic product. The government's budget aims for 7.4%. For 2012, the commission said the deficit would be virtually unchanged, at €21.0 billion, or 9.3% of GDP. Greece is planning to reach a deficit of 6.5% next year with new fiscal belt-tightening.
The commission said it increased its forecast for the 2011 budget deficit largely because Greece failed to bring in as much tax revenue as expected.
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