Greece's economy, which is characterized by robust growth, has to a great degree attained alignment with other European Union economies, the bloc's executive Commission said on Tuesday.

In an annual report on EU public finances, the Commission noted that Greek interest rates had declined steadily since 1999 to stand at around 2.0% currently.

"These levels are among the lowest in recent years and have had a favorable impact on private investment and consumption," the report said.

The Commission repeated its spring forecasts that the country's fiscal deficit will fall below 3.0% of gross domestic product in 2006, rising to 3.5% in 2007 on a working hypothesis that next year's budget will be roughly the same as its predecessor, which Finance Minister George Alogoskoufis has stated will not occur.

At the same time, the report underlines that structural measures must be taken as the only way to keep the fiscal deficit below the EU's 3% ceiling on a permanent basis.

Acknowledging the government's commitment to attaining fiscal stability, the Commission stressed that extra emphasis should be given to spending curbs linked to an ageing population, an indirect reference to reform of Greece's social insurance system.

In addition, if decisive measures are not taken to correct the cause of certain fiscal imbalances, especially spending, then repercussions are likely to be felt on the external trade deficit, reflecting a lack of competitiveness of the Greek economy, according to the Commission.

Finally, strengthening growth and job creation in Greece includes the need for a combination of fiscal stabilization measures and overall structural reform, the report said.

The Commission's overall report set down the main policy conclusions of its 2006 study of public finances in European Monetary Union. It also provides a first review of implementation of the stability and growth pact as revised in June last year, and of the challenges ahead.

Source: Athens News Agency

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