ECONOMY

Eurostat finds gap in Greek fiscal figures

BRUSSELS – The European Union’s statistics service (Eurostat) has again found Greek public finance figures to be wanting, not as extensively as three years ago but nevertheless showing «a significant statistical difference» from its own figures. This difference, which relates to the budget deficit, amounts to 0.6 percent of gross domestic product for 2007, raising the total to above the 3 percent ceiling which is mandated in the EU’s Stability and Growth Pact. In 2005 Greece was placed under the excessive deficit procedure after a government-initiated revision showed it had consistently violated the norm in past years. According to Eurostat’s regular bulletin on deficit and debt in the eurozone, released yesterday, Greece’s budget deficit came to 2.8 percent of GDP, the highest in the eurozone and the third highest in the EU, below Hungary’s 5.3 percent and the UK’s 2.9 percent. Eurostat says it is «in close cooperation with (Greece’s) National Statistics Service» with a view to «clarifying certain issues,» particularly regarding the difference of 0.6 percent, which, if not resolved, threatens to raise the final deficit figure above 3 percent and again make Greece liable to the disciplinary measures of the excessive deficit procedure. For 2008, however, given a projection of a deficit of 2 percent of GDP, such a prospect seems unlikely, but confirmation of the deficit above 3 percent would definitely make things more difficult this year. Eurostat notes that the main focus of concern is the entries in the Greek budget of European Union subsidies and assistance received in 2006 and 2007, in particular the method of accounting which influences the final budget figures and the size of the deficit. Specifically, it disagrees with the entry of EU inflows of 400 million euros in the 2007 revenues, considering that they should have been included in the 2006 budget. This difference alone would push the deficit dangerously close to 3 percent. In Athens, Economy Ministry sources attributed the differences to «technical issues» which will be resolved by September and will not lead to a substantial revision of the deficit data. According to the bulletin, Eurostat is also in the process of clarifying, at European Union level, the correct method of recording funds for public works in national budgets and how they affect public debt. Perennial problem Nevertheless, Greece still appears to be facing the perennial problem of accurately recording the expenses and revenues of the country’s local government authorities and of the social security system. This problem gave rise to the so-called «white hole» in public finances in the early part of the decade which ultimately turned out not to be such a big surplus as calculated by the previous government, but is now casting its shadow over 2007 figures. Additionally, there seems to be an issue involving the breakdown of the basic expenses and revenue data which the National Statistics Service processes to arrive at the final budget figures. Eurostat notes that such issues arise from «doubts as to the quality of data» submitted by Athens. It also refers to the issue of public debt, which represents 94.5 percent of gross domestic product, much higher than the ceiling of 60 percent specified the European Union’s Stability and Growth Pact and the second highest after Italy’s 104 percent.