ATHENS, Feb 7 (AFP) - The International Monetary Fund voiced concern Monday about Greece's capacity to meet its reduced public deficit target this year, saying it was based on an "optimistic" 3.9 percent economic growth forecast.
The Greek government's 2005 budget aims to reduce the deficit to 2.8 percent of gross domestic product, bringing it into compliance with a European Union deficit ceiling of 3.0 percent of GDP.
"Directors welcomed the appreciable adjustment aimed for" in the 2005 budget, the IMF executive committee said in a statement published by the Greek economy ministry.
"However, many expressed concern that the deficit targeted in the budget might be difficult to achieve, given the optimistic growth assumptions."
The Greek economy ministry was due to publish in late February the public deficit figure for 2004, currently set at 5.3 percent of GDP in the 2005 budget.
Greek deficits have been revised drastically higher following an audit of public finances initiated by the conservative government that took power in March 2004.
The IMF directors, underscoring the need for a rebalancing of public finances, called on the Greek government to act swiftly to limit state spending and to speed up structural reforms, particularly regarding pensions due to the long-term threat of an aging population" on public finances.
"They expressed disappointment that pension reform is not part of the government's immediate priorities... and urged the authorities, as a minimum, to begin as soon as possible the public debate needed for a social consensus," the Fund statement said.
The directors also cited the need for faster progress in labor market reform that would include increased flexibility.
02/07/2005 16:12 GMT - AFP