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Olympics to cost 30 percent more

June 17, 2004 20:51 IST
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The cost of the Athens Olympic Games will be 30 percent higher than initially expected, reaching 6.0 billion euros ($7.29 billion), Greece's finance minister said on Thursday.

The conservative Greek government, which swept to power in March after 11 years of Socialist rule, had previously hinted the Olympics would considerably exceed the original 4.6 billion euro budget, but had not said what the final bill would be.

"There will be significant overruns in the Olympics... we will reach six billion euros," Finance Minister George Alogoskoufis told a parliamentary committee.

After wasting the early years of preparations on in-fighting and bureaucracy, the organisers have gone into overdrive in the last two years to complete the venues, pushing up costs as contractors deploy double and triple working shifts.

Surging Olympics costs have forced the Greek government to borrow more than it had planned this year to make ends meet in the run-up to the Games.

Last-minute tightening of the purse strings also meant an Olympic bonus, intended to sweeten up civil servants drafted in to cope with unusually high demand in August, would be given only to a few of the unions it was originally promised to.

Greece even cut back on its traditionally high defence spending to make funds available for the Games.

"This is a significant overrun which creates a considerable challenge for Greece's fiscal policy," said an economist who preferred not to be named.

"This reduces the government's flexibility to go ahead with the pro-growth policies it has promised, like tax cuts," the economist added.

Alogoskoufis told Parliament that the 2004 budget, drafted by the outgoing socialists, would most likely be off kilter, and repeated a warning on the budget deficit.

"I have to warn you (Parliament) there will be deviations from the 2004 budget and it will be hard to keep the deficit under 3.0 percent of GDP," he said.

The European Commission has already expressed its displeasure over the breach of the bloc's rule that deficits should not exceed 3.0 percent of GDP, and is expected to issue a recommendation on June 24 on how Greece can curb its deficit.

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