ECONOMY

Debt swap deal legal at the time

Greece’s 2001 debt swap deal with US investment bank Goldman Sachs was legal and compatible with Eurostat rules, Finance Minister Giorgos Papaconstantinou said yesterday. «The transaction was legal and Eurostat-compliant,» he told Parliament’s economic and monetary affairs committee. The European Commission has asked Greece to provide the details of the deal, which helped the country fulfill the criteria to join the euro in 2001 by deferring interest rate payments on its debt. The EU statistics agency, Eurostat, said it has only recently become aware of the complex transaction. Both Greece and Goldman Sachs have come under heavy criticism over the deal, which was made public just as speculation is mounting about the possibility of the EU rescuing Greece from its heavy debts. Derivatives such as the currency swap are no longer compliant with EU rules and Greece no longer makes use of such deals, added the minister. German Chancellor Angela Merkel said yesterday it would be a «scandal» if banks are found to have helped Greece to conceal its budget deficit. Merkel criticized banks for their role in triggering the financial crisis that forced the German economy and the rest of Europe into its worst recession since at least World War II. Greece «falsified statistics for years,» Merkel said in her speech to a party rally in Demmin. «It’s a scandal if it turned out that the same banks that brought us to the brink of the abyss helped fake the statistics,» she added.