ECONOMY

PASOK officials accuse gov’t of distorting budget figures

Former economy and finance ministers from the previous Panhellenic Socialist Movement (PASOK) government went on the offensive yesterday to shake off accusations they faked financial data to keep the country’s public deficit in compliance with the eurozone’s Maastricht criteria. Greece’s financial data from 1997-1999, on the basis of which Athens secured entry to the eurozone, will not suffer from the ongoing EU investigation into the country’s past budget figures, Yiannos Papantoniou, national economy minister from May 1994 to September 1996 and thereafter economy and finance minister to October 2001, insisted yesterday. «The changes do not concern the years before 2000… There were no significant military orders at the time,» Papantoniou explained. Papantoniou along with three other ex-ministers from the Socialist governments that ruled Greece from October 1993 to March 2004 rejected accusations from the ruling conservatives that they continuously massaged budget figures to press the public deficit below the EU-prescribed limit of 3 percent of output. Speaking at a news conference, they accused in turn the government of cooking the books to tarnish the Socialist record in power. «This campaign by the new government has two aims: to discredit PASOK and its tenure in office and to create an alibi for abandoning its extravagant pre-election promises,» PASOK economic policy coordinator Theodoros Pangalos said. «We’re proud of our economy,» said Nikos Christodoulakis, finance minister from 2001 to March 2004. A recent revision of Greece’s post-2000 budget figures, conducted by Greece’s conservative government and approved in September by the EU statistical agency Eurostat, revealed that the country’s public deficit consistently breached the EU limit of 3.0 percent of gross domestic product (GDP). Retroactively applied to spending on a huge, 10-year armaments program running since 1999, the bulk of which was paid for in 2000-2002, the change resulted in budget deficits exceeding the 3 percent deficit rule. «The new government discovered no slush funds, no payment obligations that had been unaccounted for,» Christodoulakis said. Speaking to a European Parliament committee on October 5, Eurostat General Director Michel Vanden Abeele said the conservatives changed the calculation method because they had no information on the exact delivery time of much of the military equipment ordered. «This (finding out exact delivery dates) is an administrative problem and the (conservative) government should have been able to solve it,» Papantoniou told the news conference. According to Vanden Abeele, the switch from accrual to cash basis in relation to military spending explains between 25 and 90 percent of the increase in Greece’s deficit each year between 2000 and 2003. The audit of public finances was absolutely necessary, Deputy Finance Minister Petros Doukas countered yesterday, addressing the Parliament’s Financial Affairs Committee about the draft budget. Knowing reality is a condition for our survival, said a combative Doukas. The minister cited military expenditure as a typical example of bad estimates and of the lack of budget transparency, with only a third of the 2004 payments for weapon systems having been recorded. He also mentioned several cases of hidden state debts, such as the passing of the payment of interest due in 1995-2000 on to a later period. Doukas sounded more optimistic for the following year, explaining how the deficit will be reduced: Observing that there will be no Olympic Games expenditure, he said that spending will be more moderate and tax revenue will grow through nominal GDP increase, payment of outstanding taxes, return of Greek capital from abroad and better overall function of the tax system. At the Council of EU Ministers of Economy and Finance (Ecofin) on October 20-21, Economy and Finance Minister Giorgos Alogoskoufis will explain to his counterparts that Greece will present reliable data from now on, reflecting the truth. On October 26, the EU will publish a report containing estimates about the course of major economic indicators. In November, it will consider the 2005 budget targets. (AFP, Kathimerini)