Hidden debt eats up fake fiscal figures

Eurostat revises Greek numbers

After several years of false euphoria over its economic performance, Greece came down to earth yesterday with the announcement that Eurostat's revised figures turned up hidden deficits and greater debt.

After discussions with the EU statistical service, which began on March 23 and are expected to continue and could lead to further revisions, the government changed its figures from 1998 onward. The surpluses of past years - from 2000 on - became deficits. The most significant point, however, is that public debt was actually 7.3 percent greater than the «virtual» one, coming to 107.3 percent of GDP in 2001, rather than 100 percent. This implies the acceptance of a further 3.5 trillion drachmas (10.3 billion euros). It also shows the extent of fiscal distortion during the critical period between 1998 and 2000 when Greece was moving toward entry into the eurozone.

Greece expects to see a fiscal shortfall to 2004 as a result of revisions to public finances made in accordance with new requirements set by Eurostat, Economy and Finance Minister Nikos Christodoulakis said. The budget deficit for 2000 soared to 1.8 percent of gross domestic product from an original estimate of 0.8 percent, while last year's surplus turned into a 1.2 percent shortfall.

The projected 0.4 percent surplus this year is due to become a 1.1 percent deficit and an estimated 0.8 percent surplus next year will, instead, become a 0.4 percent deficit.

Eurostat's decision to include securitization revenues in public debt also ended hopes of improving the debt-to-GDP ratio to 90 percent of GDP by 2004.

Christodoulakis also said that growth in 2003 would be forecast downward to 3.8 percent of GDP, from 4.1 percent in the original draft budget. The final budget proposal is to be presented to Parliament on Nov. 19.

The conservative New Democracy party, which claimed for years that the government was cooking the books, declared: «After the government admission of this huge conjuring trick, which created a fake picture of the country's true economic situation, every well-meaning citizen asks himself whether it will ever again be possible to trust the Simitis government on anything.»