The European Union said it expects Greece to implement its deficit-cutting plan as officials from the EU and International Monetary Fund began an inspection in Athens.
"For now we are optimistic," EU spokesman Amadeu Altafaj told reporters in Brussels today. "The work is difficult but is proceeding well."
EU and IMF officials began talks in Athens today as part of regular checks on the government's budget plans, which are being monitored under the terms of the €110 billion package of emergency loans being
provided to Greece.
A Finance Ministry official in Athens said the visiting team expressed concern about inflation, and that Greece will meet its goals in the end. Inflation probably won't meet the annual goal outlined in the memorandum with the Greek government, said the official.
The EU-IMF forecast for inflation in Greece this year is 1.9 per cent. Inflation in May accelerated to the fastest in at least a decade amid higher prices for fuel, alcohol and tobacco products, reflecting higher taxes on those goods.
Consumer prices in the country increased 5.4 per cent from a year earlier after a 4.8 per cent gain in April, the Hellenic Statistical Authority said last week, prompting Finance Minister George Papaconstantinou to call the figure "worrying."
The price of alcoholic beverages and tobacco products rose an annual 16.9 per cent while transport costs jumped 20.3 per cent following an increase in the excise duty on fuel.
Greece pledged to increase fuel, alcohol and tobacco taxes further as part of efforts to reduce the euro region's second-biggest budget deficit to 8.1 per cent of gross domestic product this year from 13.6 per cent in 2009.
Reuters