New budget bombshell?

After having its budget figures ignominiously revised twice over the past month by international and domestic auditors, the government could be in for further embarrassment over its accounting practices on arms spending, sources said yesterday. According to Economy Ministry sources, Eurostat, the European Commission’s statistics agency, wrote to the government in mid-November seeking further clarification on the way the vast sums Greece spends on defense are entered in the annual state budget. Last month, Eurostat said that in 2001 state spending had resulted in a deficit corresponding to 1.2 percent of GDP – as opposed to the modest surplus announced by the government. Then, a State Audit Council report made public on Monday slapped on an additional 3.9 percent to the deficit, sparking furious government denials. Since 1996, Greece has signed some 20.5 billion euros’ worth of military contracts, and pays some 3.37 billion euros for arms every year. But only a third of these sums are believed to be entered on the state budget.

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