Greece missed budget targets set just this last May.
According to several media reports, The draft budget calls for a deficit of 8.5% of Greece’s gross domestic product in 2011, falling short of a target of 7.6%
Greece will miss targets for 2012 as well, based on numbers released by the Greek Finance Ministry. The current plan calls for 30,000 public workers to lose their jobs.
The trouble comes at a time when a coalition of the IMF, EU, and ECB is barely held together in it plans to bailout Greece primarily because concerns about containing the disaster so as not to allow it the chance to spread to Portugal or Italy. The new numbers may cause political pressure on elected official in Germany, who have, until now, backed the bailout.
The new data may also encourage politicians who want private investors in Greek debt to bear more of the burden of the restructuring. This would trigger large write-offs at financial firms which bank experts say are already in trouble.
Finally, those bailing Greece out could ask for more austerity measures, which would put government layoffs higher and cause the disintegration of the Greek economy to accelerate.
Douglas A. McIntyre
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