ECONOMY

Clouds of doubt hang over data

The European Union confirmed yesterday that estimates of Greece’s budget deficit and government debt will be revised higher for the years 2006-09, as Finance Minister Giorgos Papaconstantinou admitted that he does not know how high last year’s budget shortfall may go. The EU’s statistics office, Eurostat, will publish Greece’s revised figures by October 22. «After Eurostat’s latest visit, it was evident that some areas of uncertainty remain,» Amadeu Altafaj, spokesman for EU Economic and Monetary Affairs Commissioner Olli Rehn, told reporters in Brussels. As a result, Rehn «instructed Eurostat to reinforce its resources on the ground for the urgent task of clarifying the Greek national accounts.» A senior Greek government source said on Tuesday that Greece’s 2009 budget will be revised to 15.1 percent of gross domestic product by EU statisticians, from 13.8 percent previously. This would push Greece’s budget gap past that of Ireland, which had the biggest shortfall in the EU last year. The changes will also mean that Greek debt will rise to 127 percent of GDP from 115.4 percent of GDP previously, the source added. Questioned on whether Greece’s 2009 deficit could be revised above 15 percent of GDP, Papaconstantinou refrained from answering in an interview on TV channel Mega late on Tuesday, leaving open the possibility of an even sharper upward revision. «We don’t know where [the deficit] will reach because we are waiting for formal data from Eurostat. What we have is several areas of the government, such as state enterprises, with large deficits that had not been taken into account,» said the minister. Despite news of the upward revisions, the premium demanded by investors to hold Greek government debt fell to a two-month low yesterday, while the cost of insuring peripheral eurozone debt also fell. The 10-year Greek-German government bond yield spread narrowed by 14 basis points on the day to 771 bps – its narrowest since early August. The cost of protecting government debt against default in Greece, Portugal and Ireland – the eurozone’s front line of stressed sovereigns – fell, according to credit default swaps monitor Markit. Five-year CDS on Greek debt fell by 20 basis points on the day to 715 bps, Portuguese CDS fell by 18 bps to 387 bps and Irish CDS were down 14 bps at 422 bps.