Greek budget crisis.

On February 15 and 16 EU finance ministers will make its final approval.

The measures to be taken include further spending cuts and the new taxes.

The key problem is that borrowing cost for Greece is higher than for other EU countries that can be increased because of the risk that of Greek government bonds’ sell off.

The tax problem in Greece is also regarded as severe, because of bureaucracy and inefficiency in the tax collection process. In addition with the beginning of the Greece crisis reduced the demand for euro causing the rate to go down.

Monday euro hit the low of $1.3854. Amelia Torres, the commission spokeswoman on economic issues, expresses fear that the Greece GDP growth rate will be slower than it is necessary to reduce the budget deficit to 3% of GDP by 2012, the limit established by European Union rules. In 2009 this figure reached 13% of GDP.

According to the European Commission forecast the Greek economy in 2011 will grow only by 0.7% and tax revenue would be weak.

Greek budget crisis can affect the economies of other countries of single European currency, especially Portugal and Spain also having big deficits.

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