Greece got the green light last week for its 1.5 billion ($1.7 billion) securitization deal (see ASR, 11/28/05), but reiterated that it will not use proceeds from the transaction to bolster its 2005 and 2006 budgets.

The deal could have reduced the 2005 deficit to 3.6% from 4.4% of GDP, closing the gap caused by a tax revenue shortfall. Greece initially anticipated using the securitization proceeds in its 2005 budget, but reversed the decision following the European Commission's disapproval. The nation's minister of finance said Greece would seek permanent structural measures to address its deficit and believes it can reduce the deficit to below 3% of GDP by the end of this year without using securitization.

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