Public debt on the march

The Public Debt Management Organization (PDMO) today is deciding on the duration of the government’s first syndicated loan for 2007, which will be for the sum of about -5 billion. The duration will be either 10 or 30 years. The government has budgeted to borrow -35 billion this year to meet spending requirements and the liabilities resulting from the country’s public debt of -226 billion. Deputy Finance Minister Petros Doukas told Parliament recently that in 2007 Greece will pay out -88 billion and will receive -53 billion, including European Union budget contributions. The difference, -35 million, will be covered through borrowing. This means that Greece has to borrow about -100 million a day. Economy Minister Giorgos Alogoskoufis recently said the effort to contain the huge public debt had to be a continuous struggle. Data from the General Accounts Office, however, show that the public debt continues to rise, also influenced by factors other than the budget deficit. From -215.4 billion (119 percent of GDP) at the end of 2005, it stood at -226.08 million (116 percent of GDP) a year later, and is projected to rise to -234 billion (112.3 percent of GDP) at the end of 2007. The budget deficit of 2005 came to -8.56 billion, but the debt was further swollen by the cost of arms procurement (-1.5 billion), debt repayments (-216 million) and debts of social insurance agencies (-423 million). Such additional, out-of-budget spending has for years been one of the main (and largely invisible) reasons for the swelling of public debt. Officials claim that there will be a clampdown on such sources of debt in 2007. Apart from the public debt, the country’s total burden includes some -300 billion owed by social security organizations, -76 billion owned by households and -92 billion in corporate debt, making a total of -694 billion.