ECONOMY

Gov’t debt jumps to 282 bln euros

Greece’s public debt rose by an unprecedented 20 billion euros in the first quarter of the year, exceeding government targets and highlighting the economy’s poor fiscal condition. Data from the General Accounting Office, which is part of the Economy and Finance Ministry, showed yesterday that central government debt hit 282 billion euros, about 111.8 percent of gross domestic product (GDP), at the end of March versus 262 billion euros at the end of last year. At the end of March last year, the figure stood at 247.4 billion euros. The government’s last official forecast for public debt in 2009 stood at 273.5 billion euros, as outlined in the draft budget prepared last last year. However, since then budgetary and macroeconomic targets were revised in the stability program submitted to Brussels in January. A breakdown of the debt figures shows that most of the borrowing is up for repayment over the long term. Just over 24 billion euros has been taken out via 12-month treasury bills, while medium-term debt – for between one to five years – accounts for 92.7 billion euros. Some 123 billion euros are expected to be up for repayment in more than five years. The growing debt will demand a larger chunk of money from the state budget in the form of interest payments. The 2009 budget forecasts that interest expenses will reach 12 billion euros, up from 11.3 billion euros last year. The rising debt has resulted in investors questioning Greece’s ability to meet its financial obligations, given that the slowing economy is weighing on tax revenues. Earlier this week, Nouriel Roubini, the New York University economics professor who predicted the financial crisis, said during a visit to Athens that, although public debt is very high, Greece will be able to meet its obligations. He added, however, that this situation will not be able to continue for very long.