Foreign investors possess an increasing part of Greece’s high debt, according to data released by the Bank of Greece in its latest Economic Bulletin. Data from the first quarter of 2003 show that Greece borrowed 15.88 billion euros during this period to refinance its debt. Of these, 8.74 billion euros, in the form of debt paper, ended up in foreign investors’ hands. This figure is 42.1 percent higher than the one in the same period for 2002 (5.05 billion euros) and gives rise to dangers not seen for years. Before Greece joined the eurozone, in January 2001, such a development could be dangerous for the local currency, the drachma, because it left it vulnerable to devaluation pressure. Foreign investors’ preference for Greek bonds and treasury bills is due to their higher yield compared with similar paper in the other European countries. It is also known that Greece has the lowest credit rating of European Union countries by both Moody’s and Standard and Poor’s. This means it must pay for the higher risk when it borrows, even now that it has joined the safe haven of a hard currency. For the whole of 2003, the government plans to borrow at least 32 billion euros through the issuance of debt paper (the 2003 budget forecast 31 billion euros), up from 30.1 billion in 2002 and 22.4 billion in 2001. This increase does not square with the much-advertised fiscal tightening and proves that, government claims to the contrary, fiscal tightening is a myth. Not only that, but the use of creative accounting worsens the situation and even puzzles those who are in charge of public finances. Recently, a case surfaced about the very expensive $10 billion swap conducted by the Public Debt Management Agency (PDMA). The fact that no officials reacted, either in defense of the move or to deny it, shows that there is a lot more to the accusations of creative accounting and operations with a variety of financial instruments. Yesterday, Adam Regouzas, an opposition New Democracy MP, revealed a discrepancy in official figures concerning defense expenditures which shows that, even where Greece’s defense procurement program is concerned, creative accounting rules.