BUSINESS

Greek state budget deficit shrank in January-February period, beating target

03/21/2012 02:53 EDT | Updated 05/21/2012 05:12 EDT
ATHENS, Greece - Greece is already beating some of its debt-reduction targets, as figures released Wednesday show its central budget deficit for the first two months of 2012 had shrunk by more than half compared with the same period last year.

The state budget deficit — the amount the government spends against what it receives in taxes — was €495 million ($655 million) in January and February this year, the Finance Ministry said. That was significantly lower than the €879 million target set out in the budget, and less than half the €1.1 billion in the same period last year.

The figures were published hours after Philippos Sachinidis was sworn in as the new finance minister, replacing Evangelos Venizelos who quite the post Monday after being elected to head the majority Socialist party.

Sachinidis, 49, was promoted from deputy finance minister after serving for two years as the head of a Greece's drive to cut public spending.

Prime Minister Lucas Papademos' government is expected to call general elections for late April or early May after successfully negotiating a massive debt deal for additional rescue loans from eurozone countries and the International Monetary Fund and a debt restructuring with banks and other private bond holders.

Conservatives are leading in opinion polls but have suffered a drop in popularity in recent weeks, stung by their participation in the governing coalition and the emergence of a splinter party.

A tracking survey to published Thursday by the weekly news magazine Epikaira gave the conservative New Democracy party 22.5 per cent of projected support, losing five points from the previous month, while the newly founded Independent Greeks breakaway party received a surprise 11 per cent.

The majority Socialist party gained slightly in the VPRC survey and received 12.5 per cent. No margin of error was quoted.

Early Wednesday, Greek lawmakers approved the new international bailout deal, which will see Greece receive €172 billion ($227 billion) in rescue loans over the next few years. The amount includes a second, €130 billion ($172 billion) package as well as the undisbursed portion of a first, €110 billion ($145 billion) bailout and funds from the IMF.

Greece received the first installment of €5.9 billion ($7.8 billion) from eurozone countries on Monday, and a further €1.6 billion ($2.1 billion) from the IMF on Tuesday.

In exchange for the additional support, Greece agreed to impose harsh austerity measures during a fifth year of recession, slashing the minimum wage, pension and benefits — including deep cuts in the health service.

Greek state hospital services faced disruptions Wednesday as staff held work stoppages and protests over government austerity measures and pay delays.

Doctors and staff at public hospitals in the greater Athens area walked off the job for three hours Wednesday, and held a central Athens demonstration, with some protesters turning up wearing surgical gowns.

Hospital doctors were also holding a go-slow protest, demanding the payment of overtime they say has not been paid for four months.

In an effort to boost Greece's economy, a loan guarantee fund for small and medium-sized Greek enterprises has seen set up by the European Investment Bank, the European Commission and Greece.

The fund will guarantee European Investment Bank loans to enterprises through Greek banks for a total of up to €1 billion, the EIB and Commission said.

European regional policy Commissioner Johannes Hahn was in Athens for the agreement.

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Derek Gatopoulos contributed.