ECONOMY

Alogoskoufis expects no sanctions for past deficits

Economy and Finance Minister Giorgos Alogoskoufis appeared confident yesterday that the European Commission will not take Greece to the European Court over its excessive deficits and accounting practices, even though the Commission is poised to send a warning letter to Greece this week. Alogoskoufis said that the government and the Commission had agreed that the latter would send a letter to his ministry detailing all infractions of EU regulations concerning budget deficits and the public debt. He added that the report by Eurostat, the EU’s statistics agency, also to be revealed this week, will be a «stinging rebuke» to the accounting practices followed by the previous, Socialist government. The New Democracy government’s re-examination, or «audit,» of public finances for years past has been heavily criticized, both by the opposition and people within the government, with the most recent criticism coming from ND Euro MP Giorgos Dimitrakopoulos. The latter did not say that the government merely cooked the books by shifting expenditures from one year to another, as the Socialists did, but accused it of clumsiness and of opening, with its declarations, a Pandora’s box, allowing the EU to end up claiming that Greece had joined the eurozone under falsified figures. The issue has also been kept alive by Alogoskoufis’s contradictory statements, claiming, at one point, that next year, with the deficit below 3 percent of Greece’s GDP, the country will become a legitimate member of the eurozone for the first time and then retracting his words by saying that this happened in 2000. Yesterday, despite renewed criticism of his predecessors, he was strangely defensive by claiming, essentially, that the whole matter had got out of hand. «We, as a government, conducted the audit for 2003; the rest was done through an EU initiative,» he said. Alogoskoufis also revealed that there is an additional burden to be added to the previous years’ budget deficits: namely, hospital debts. According to government sources, these stand at 2.1 billion euros, or about 1.4 percent of GDP. Alogoskoufis failed to address the issue of the remarks by Eurostat, included in an internal Commission document, to the effect that the EU is still not satisfied with Greece’s accounting methods. This, despite the government’s assurances that the Commission’s letter this week would only condemn past practices. The document, revealed yesterday by daily Ta Nea, lays doubt on government revenue estimates, says that data provided on pension fund and hospital finances was incomplete and that the government is not following EU regulations on new debt. Furthermore, the document says that the previous government’s method of entering defense expenditures was the correct one, although it adds that Greece used the excuse of those expenses being classified information not to enter all of them. Alogoskoufis also met yesterday with the board of the Hellenic Banks’ Association to discuss the impact on banks’ finances of their overburdened employee pension funds. The talks revealed that the banks were far from adopting any common position to tackle the issue.