Greece hit by IMF warning and widening public deficit

City A.M. Reporter
GREECE’S yawning public deficit widened in the first 11 months of the year, putting budget targets further out of reach, as the IMF warned that the country was reaching its limit on new taxes and cut its growth forecast.

Finance ministry data showed the budget gap of the central government widened 5.1 per cent to €20.52bn (£17.3bn) in the first 11 months of the year -- suggesting that Greece could miss its target of cutting the deficit to nine per cent of GDP from 10.6 percent last year.

The IMF, one of the providers of Greece’s bailout, said yesterday that the country should be focusing on spending cuts rather than extra taxes for its people.

It now expects the Greek economy to shrink by six per cent this year, from 4.5 per cent previously.

“Reforms have been running behind schedule and have not yet reached the critical mass needed to decisively transform the investment climate,” Poul Thomsen, the IMF mission chief for Greece, told reporters on a conference call.

Adding to the struggling peripheral Eurozone county’s woes, bleak construction data yesterday showed that a deep slump continued in what had been a key driver of growth when Greece joined the euro and organised the 2004 Olympics.