Greek debt and deficit at EU peak

Eurostat sees data discrepancies

Greece had the highest budget deficit and public debt in the European Union for 2004, according to provisional figures released yesterday by the EU statistics branch, Eurostat, which put the deficit shortfall at over double the limit for eurozone members.

The deficit reached 6.1 percent of GDP, according to Eurostat, compared to the 3 percent ceiling set for member states that have adopted the euro as their currency. The average deficit among eurozone members during 2004 was 2.7 percent of GDP.

The figure has been consistently revised upward since last summer and, based on the government’s most recent prediction that the 2004 deficit would reach 5.3 percent of GDP, the European Council of Finance Ministers (Ecofin) decided last month to give Greece an extra year — until the end of 2006 — to bring it within eurozone guidelines. The government is due to submit a revised plan to the EU on March 30, explaining exactly how it proposes to achieve this goal.

“What the figure means is that the fiscal adjustment effort Greece will have to make in 2006 will have to be much higher than originally expected,” EU spokeswoman Amelia Torres said, reacting to yesterday’s notification.

Meanwhile, Greece’s public debt ran to 110.5 percent of GDP in 2004 (182.7 billion euros), according to Eurostat’s new figures — the highest among 25 EU members and in the eurozone, where the average was 71.3 percent of GDP.

However, the statistical body left the possibility open that the debt and deficit figures could be revised upward, as it said there were certain discrepancies that needed to be ironed out. Eurostat indicated that data on money owed by state hospitals and the final figure for government expenditures on the Olympic Games were not yet final.

The Finance Ministry issued a statement in response to yesterday’s Eurostat figures, blaming the previous PASOK government for irresponsible management of public finances and bookkeeping as well as budget overruns for the Olympics, which led to the current dire state of Greece’s public finances.