Deficit revision confirms Greeks’ fears

The final figure for the 2009 deficit stands at 15.4 percent of gross domestic product, Eurostat announced yesterday, confirming reports about last year’s budget shortfall exceeding 15 percent in the updated calculations. The previous estimate had been for a deficit of 13.6 percent of GDP, and it was on that basis that the 2011 budget had been drafted. What is more, the state debt has grown from 116.3 percent of GDP to 126.8 percent. The incorporation of the finances of 17 state companies into the fiscal deficit and state debt as well as the most accurate reflection of the financial figures of social security funds and the local authorities have led to a significant adjustment in the numbers for the previous fiscal year. At the same time, this revision has led to a major adjustment in the 2010 deficit and debt. According to the data issued yesterday by Eurostat, the European Union statistics agency, this year’s budget deficit is now expected to soar to 9.4 percent of GDP (or as much as 0.1 percent more), from an original estimate of 7.8 percent, while the state debt is seen as rising to 144.2 percent of GDP from 132.7 percent. The new data mean that public debt will soar to 160 percent of GDP in 2012 before starting to drop in 2013. As far as last year’s deficit is concerned, it reached 36.2 billion euros and its rise by 3.9 billion, or 1.8 percent of GDP came from the incorporation of the finances of public companies into the state budget (1.8 billion euros), the inclusion of the results of social security funds and local authorities (1.9 billion euros) as well as the decline in GDP for 2009 by 200 million euros. The adjustment of last year’s budget debt with an additional 26.7 billion euros is mostly attributed to the inclusion of state companies (18.2 billion euros of debt, or 7.75 percent of GDP) and the acknowledgment and incorporation in the public debt of the off-market swap agreements. The biggest one of these was concealed in 2008 and concerned a swap conducted when Giorgos Alogoskoufis was finance minister. In total, the state debt grew by 5.33 billion euros or 2.3 percent of GDP due to the off-market swaps. Another problem is that the so-called surplus of the social security funds that was to have offset some of the deficit has become an additional deficit in 2009 and 2010. The numbers for the social security funds in 2009 were negative by 682 million euros and those of the local authorities by 65 million euros. In total they had a deficit of 747 million euros against a surplus of some 2 billion estimated for 2009 according to this year’s budget. The revisions for the 2010 budget are attributed to the same factors. The finances of the public companies have affected the government deficit by 0.3 percent of GDP and the revision of the finances of local authorities, social security funds and other bodies by 1.2 percent. This year the deficit of the funds is estimated at about 440 million euros.