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2002 OECD Economic Surveys: Greece 2002

image of OECD Economic Surveys: Greece 2002

This 2002 edition of OECD's periodic review of Greece's economy examines recent economic developments, policies and prospects and includes special features on public expenditure and structural reform.

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Fiscal Policy Issues

Greece has made substantial progress towards controlling public finances since the early 1990s, correcting fiscal imbalances within the framework of convergence programmes. The general government deficit declined by around 15 percentage points of GDP during the 1990s, falling to below 1 per cent of GDP in 2000. The fiscal improvement was aided by strongly rising revenues, and since the mid-1990s, by lower debt interest payments. By contrast, primary current expenditure has continued to drift up. The debt-to-GDP ratio, though falling since 1996 to its current value of about 100 per cent of GDP, remains well above the 60 per cent Maastricht ceiling, despite sizeable privatisation proceeds. Fiscal policy has become less restrictive since 1998, moving to a neutral stance in 2001. On a cyclically adjusted basis, net lending narrowed only slightly between 1998 and 2001 (by around 1 percentage point, compared with 12½ percentage points between 1990 and 1997). However, budgetary outcomes up to 2000 have been close to, or even outperformed, the initial targets, reflecting mainly positive surprises on the revenue side.

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