EU places deficit higher

The European Commission yesterday revised upward its estimate for Greece’s 2004 budget deficit to well over 6 percent of gross domestic product (GDP), even while the country’s accounting woes look set to continue as the Commission added that it has not finished going over the government’s books. Eurostat, the Commission’s statistical arm, said that the budget deficit in 2004 hit 6.6 percent of annual economic output. The Finance Ministry had estimated a lower figure of 6.1 percent. EU spokeswoman Amelia Torres said that the deficit could go either higher or lower, as Eurostat has not completed its review of Greece’s books. The difference will not be significant, Torres said. The statistics office has yet to determine how to treat state accounting items such as hospital expenses and the inflow of EU-related funds. Under the previous, Socialist government the deficit was initially estimated at just over 1 percent of GDP. However, a series of state-initiated revisions sent the figure soaring after the conservative government took power in March last year. Finance Minister Giorgos Alogoskoufis has defended the controversial move, saying that it was needed to help restore order to the state’s finances which, he said, gave a misleading impression. Opposition parties have attacked Alogoskoufis over the changes, saying that they have hurt Greece’s credibility abroad. In response to the news yesterday, Finance Ministry sources shrugged off the development by saying that the changes relate to the past. «We continue to focus our attempts on the target of restoring order to the budget,» a ministry source said. Greece had the largest deficit figure in the EU for 2004. Hungary was in second place with a deficit of 5.4 percent of GDP.