ECONOMY

Audit Council notes fiscal improprieties

The State Audit Council’s report on the Finance Ministry’s budget management in 2002, submitted to Parliament on Friday, finds a series of actions «’incompatible with the constitutional and public accounting order.» The objections of the country’s top public auditing agency concern the so-called «special accounts,» which have existed for a long time and are not included in the state budget despite handling public revenue and expense flows. One such account is the one for public debt management, which, according to the council, «results in revenue deposited in it and expenses paid from it not appearing in the budget and annual report.» The agency also found another incompatibility with the public accounting order: the agency’s failure to record on the expense side of the budget revenue totaling 59.8 million euros, which the government raised under a securitization scheme of future receivables, «despite the fact that these sums were collected and appeared on the revenue side of the budget. The recording of the above sum in the budget revenue and annual report, and the failure to record it on the expenses side, even though it has been disbursed, both contributes to the incorrect depiction of revenues in the annual report and creates difficulties for its settlement in future fiscal years,» said the State Audit Council. Particular mention is made of loans obtained for the Defense Ministry, totaling 1,758 billion drachmas (about 5.16 billion euros), which were not recorded in the budget for the fiscal years from 1994 to 2001, the government citing «technical reasons.» The agency also notes that similar loans of $174 million and 500 million euros were not recorded in 2002 budget revenue. Also out of line is the special account set up by the Bank of Greece for revenue, expenses and commissions concerning privatizations, the council says. «The council received no details of transactions in this account and was unable to audit the entries.» Further, the report notes that sums disbursed under public investment accounts were not appropriated, which prevents their proper auditing. Total revenue collected in 2002 was 1.75 percent short of budgeted sums, with borrowing from domestic sources 100 percent higher than in 2001 and from foreign sources 46.7 percent lower. Revenue from direct and indirect taxes was 9 and 7.73 percent higher respectively. Expenses were 9.1 percent higher than budgeted; debt interest payments amounted to 8.5 billion euros, and debt servicing reached 21.6 billion euros. Public debt was 7.7 percent higher and defense debt up 6.96 percent. Public investment spending was 10.56 percent less than in 2001.