ECONOMY

Revision takes 08 deficit to 5 pct

The budget deficit for 2009 will close at just below 5 percent of gross domestic product, estimates the European Commission, posting just a small decline from the 2008 deficit, the latest revision of which shows it at 5 percent of GDP. According to sources, after negotiations with and strong pressure by Eurostat, the National Statistics Service was forced to revise its data on last year’s deficit. Although on March 31 it had stated that the deficit amounted to 4.8 percent of GDP, yesterday it submitted new data that raised the figure to 5 percent, against an original target of 1.6 percent, or 3.8 billion euros. In November, the figure was revised to 2.5 percent (or 5.9 billion euros), while the revised Stability and Growth Pact submitted to the European Commission in January 2009 estimated the deficit to close at 3.7 percent of GDP (8.7 billion euros). Still, even after the latest revision, it is highly likely than on the Wednesday after Easter, Eurostat will again express its doubts about the accuracy of the data, especially regarding the surplus of social security funds and local authorities, as well as the national accounting adjustments that have been used to reduce the deficit. With the 2008 Greek deficit soaring, the European Commission will have to revise its estimates for this year as well, to be announced on May 4. Sources suggest that Brussels will calculate the deficit this year to drop to just under 5 percent of GDP. That estimate will be based not just on the fact that the Commission considers that the measures taken by Athens are not enough to sufficiently reduce the deficit, but also on a more pessimistic macroeconomic scenario that Greek GDP will contract this year by about 0.5 percent. Apart from the Commission, the Organization for Economic Cooperation and Development also expects GDP to contract in Greece, by as much as 1 percent, according to a related report.