Greece"s new center-left government pledged to pull the economy out of «intensive care,» but conceded today that public debt would continue to surge, reaching a massive 120 percent of annual national output next year, according to AP. The Socialist party"s draft 2010 state budget aims to trim government spending and cut the deficit to 9.1 percent of gross domestic product _ amid fierce pressure from the European Union to improve public finances. While still three times the EU deficit ceiling of three percent of GDP, the target is significantly lower than the 12.7 percent figure forecast for 2009. The draft budget foresees the economy starting to expand again towards the end of 2010 _ when it will shrink by 0.3 percent _ after a 1.2 percent contraction this year. «The country must come out of intensive care as soon as possible,» Prime Minister George Papandreou said. «This is just the first step ... It is our duty to change our overall course.» The government has said it will need three to four years to bring the yearly gap between public spending and receipts under three percent. Initially, Greece had pledged to do so by next year. The huge public debt, estimated at 113.4 percent in 2009, is forecast to reach 120.8 percent of total economic output next year. This year, interest payments on state debt will account for nearly a fifth of total government expenditure, absorbing some ¤12.1 billion ($17.9 billion).
