Wall Street Journal
September 2, 2011
Greece is likely to miss its budget-deficit targets this year in the face of a deep economic contraction that is turning out to be even more severe than forecast, government officials said Thursday, conceding that the country is likely to face demands for still more budget cuts.
Greece's deficit could exceed 8.5% of gross domestic product, compared with an official forecast of 7.6%, as the government struggles to meet revenue goals, two senior Greek government officials said. The deficit is now estimated at "around 8.5%, or a bit higher. Tax collection remains the main problem," one official said. "Many simply don't have the money to pay taxes. We have to get the economy going but the austerity is holding everything back."
Greek Finance Minister Evangelos Venizelos already has publicly acknowledged that Greece's recession may cause the government to overshoot its deficit forecast this year. The government expects the economy to contract 4.5% to 5.3% in 2011, compared with a previous forecast of a 3.9% decline, and the government now admits the recession may run into next year.
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