NEWS

Greece has to return chunk of EU funding

Greece agreed with the European Commission yesterday to pay back over 500 million euros in EU funds after Brussels discovered irregularities in the way the money was being used to pay for public works over the last four years. «The Commission has decided on a financial correction for irregular expenditure declared by the Greek authorities in the period 2000 (to) 2004, amounting to 518 million euros. This correction is related to public works contracts which have not been tendered or managed in accordance with European legislation,» said Danuta Hubner, commissioner for regional policy. The repayment of the funds will be phased over four years to take account of the impact on the Greek budget. The government has been given until the end of next year by Brussels to reduce the public deficit below the eurozone limit of 3 percent of GDP. At the end of 2004, the deficit stood at 6.1 percent of GDP. The government also offered to pay back a further 220 million euros over the next four years to make up for any irregularities in contracts that are currently in progress. Economy and Finance Minister Giorgos Alogoskoufis was quick to portray the agreement as a success for Greece since the Commission had originally considered demanding the return of some 1.5 billion euros. His ministry said in a statement that the deal had been the «successful outcome of tough negotiations.» PASOK spokesman Nikos Athanasakis accused the government of allowing the Commission to use Greece as its victim in a display of strictness. «I wish to acknowledge the considerable efforts made by the Greek authorities in recent months to establish the basis for a confident partnership from now on,» Hubner said. The Commission agreed not to suspend any payments to Greece from the Fourth Community Support Framework, which will run from 2007 to 2013, as long as it completed reforms to the management and control of procedures for the funding of public works projects with EU money. Hubner said she expected Greece’s legal framework to be in line with EU requirements shortly. Meanwhile, Alogoskoufis attended a meeting of EU finance ministers (Ecofin) in Luxembourg yesterday and reassured his counterparts about the economic reforms that Greece is undertaking, particularly in the field of social security. He also told the Ecofin members that his government was pleased with the country’s growth rate in the first quarter and rising Greek exports.