Knock-on effect from 09 revision

An upward revision of the 2009 budget shortfall may push this year’s deficit higher by up to a full percentage point of economic output, according to sources. The European Union’s statistical office Eurostat is expected to soon revise Greece’s 2009 budget deficit to just above 15 percent of gross domestic product, from 13.8 percent currently, due to the inclusion of currency swaps and debt owed by state enterprises as part of general government figures. A source from Brussels told Kathimerini that the revision may boost this year’s figure a full percentage point but local Finance Ministry officials believe it will be slightly less than this. Changes in the country’s accounting data may force the government to take additional measures to keep the country on fiscal track but it has little room to maneuver given the deepening recession. One area where the government could further cut 700 to 800 million euros in spending is from the public investment program, while an additional 300 million euros could be saved in operating expenses. These savings total out to 1.1 to 1.2 billion euros, amounting some 0.5 percent of GDP, and act as a cushion in the event the Finance Ministry needs to take corrective action to meet deficit reduction goals. Meanwhile, the European Union played down yesterday any prospects of extending an emergency loan program for Greece, saying that the issue was not under discussion. The European Commission, the EU’s executive arm, said Greece should be able to finance its borrowing needs on the market from 2012, the time at which a bailout scheme granted jointly by the EU and the International Monetary Fund is to end. «There is no discussion going on between the interested parties about such an eventuality [extension],» Commission spokesman Amadeu Altafaj Tardio told a regular briefing. «All this suggests that Greece will be able to fully cover its external financial needs on the markets from 2012.» The IMF said on Sunday that bailout loans to Greece could be stretched out or replaced if refinancing worries lingered in markets, but that it currently has no concrete plans to do so. Under the scheme, Greece is to be allowed to tap the facility until 2012. Germany yesterday opposed extending Greece’s repayment period for its bailout loans as the country is doing well refinancing itself.

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