This year, the budget deficit will rise to 12.7 per cent of gross domestic product – and this assumes there are no further accounting tricks to be uncovered. Deutsche Bank calculated in a recent research note that the country's public debt-to-GDP ratio is headed for 135 per cent. Gross external debt – private and public sector debt owed to foreign creditors – was 149.2 per cent at the end of last year. The real exchange rate has gone up by 17 per cent since 2006, which means the country is losing competitiveness at an incredible rate. Had Greece not been in the eurozone, it would be heading straight for default.
The government's 2010 draft budget foresees a deficit reduction to about 9.1 per cent of GDP. But the number is misleading. The lion's share of the total deficit reduction effort is earmarked to come from tax measures, and most of those from the fight against tax evasion. Tax evasion is always the item first on the list of desperate governments.
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