Greece's austerity measures have resulted in lower consumption (a trend that will continue) and increased taxes on goods and services encourage participation in Greece's already highly developed gray market. These factors limit yields from fully enforced indirect taxes. Greece had hoped to raise 5 billion euros in 2011, but political inertia and weak market demand for Greek assets have prevented Greece from selling any assets so far this year other than a 10-percent stake in telecoms operator OTE for 400 million euros. Without substantial improvements, Greece will not be able to meet future deficit targets, its austerity program will not be able to achieve its intended goals, and its economy will likely stall at the current budget deficit, which is likely to be 8.5 percent of GDP for 2011. Even if Greece can sustain deep cuts and manage to sharply increase tax collection, it will not be able to reduce its budget deficit further.
