The Economy and Finance Ministry yesterday tried to deny charges that it used proceeds from privatizations in contravention of European Union rules, but ended up admitting that it had done so. The charges were based on a response given on Monday by Deputy Economy Minister Nikos Farmakis, in response to a parliamentary query by Synaspismos Left Coalition MP Panayiotis Lafazanis. The deputy minister’s reply showed that the greatest part of proceeds from privatizations in the first nine months of the year had not been used to pay back the public debt but to cater to short-term needs and reduce the budget deficit instead. Yesterday, the ministry’s announcement said, among other things that «Revenues from privatizations are used: a) To pay privatization costs, such as preparation, advisers’ fees and the cost of enterprise restructuring; b) The liabilities incurred from privatizations, such as compensations for layoffs or early retirement of personnel; c) Liabilities imposed by the law (that is, liabilities of the employees’ pension funds); d) The remaining amount is used to pay off state liabilities to third parties. That is, the (proceeds) are not used solely to reduce the public debt – pre-purchase of state T-bills and bonds – but to pay off state liabilities in the wider sense, such as sums owed to (pension funds, the Olympics organizing committee), etc.» Point (d) of the statement is the crux of the matter. In it the government admits proceeds are «not used solely to reduce the public debt» but to pay off all kinds of state liabilities. On October 15, after the government had sold 11 percent of National Bank of Greece to domestic and foreign institutional investors, it had released a statement in response to conservative MP Miltiadis Evert, who alleged that the proceeds, 490 million euros, would be used to plug holes in the budget and not to lower the country’s enormous public debt. «This sum is exclusively used to lower the public debt… This should put an end to claims about its alleged use to lower the budget or fund the government’s recently announced social policy measures. In any case, everyone knows that, according to Eurostat rules, it is forbidden to use revenue from the sale of shares in public companies to reduce the budget deficit,» that statement said. Yesterday’s statement formally contradicts the previous one on October 15. Opposition reacts Evert said yesterday that the recent statements revealed that the government was not telling the truth. On the basis of Monday’s statement by Farmakis, he called on Economy and Finance Minister Nikos Christodoulakis to submit a new, truthful 2004 draft budget. Opposition New Democracy MPs yesterday walked out of the debate in the parliamentary Finance Committee to protest at the government’s evasive tactics. «The admission by the Economy and Finance Ministry that revenues from privatizations are illegally used to finance current state spending, completely confirms our charges. We had repeatedly warned that selloffs of public companies were used merely to cover the deficit of the current budget. The government was denying this, until now. It claimed that it used privatization revenues to reduce public debt. Now, it admits it was lying,» Giorgos Alogoskoufis, New Democracy’s shadow finance minister, said in a statement. Government spokesman Christos Protopappas, probably ignorant of the intricacies of the subject, said that everything was done according to Eurostat rules.