Objections by the EU’s statistical service, Eurostat, to Greece’s economic projections and the ensuing consultation between local and EU officials resulted in a revision of official figures concerning debt and public deficit, and turned the country’s budget surplus – mainly a product of creative accounting – into a shortfall. The 2001 deficit was revised upward to 1.2 percent and the public debt to 107 percent of GDP, recreating the problematic picture of 1997. The same review revealed a budget deficit for 2003, even if a slim 0.9 percent. These revisions undo the pleasant picture of budgetary surpluses but they don’t necessarily indicate a poor fiscal situation. It’s common knowledge that a budget deficit can be the sign of a dynamic economy, provided that the loans responsible for the deficit are channeled into productive investments. If, on the other hand, they are used for dubious investment, they end up undermining economic growth. Unfortunately, an analysis of budget spending for 2003 reveals that 74.2 percent of spending involves the payment of wages, the payment of public debt and social security contributions. Despite the fact that wages include the salaries of the health and education sectors, it is a fact that these expenses are inelastic and, to a large extent, of doubtful productivity. An analysis of the expenses and vetted numbers of the state deficit and public debt allows the conclusion that we continue to use our deficit (that is, our loans) not as a means of productive investment but as a way of covering up inelastic expenses which do not bolster growth but rather serve «social» needs or, even worse, reinforce the government’s clientele relations. The picture looks even more grim when one considers that development spending is only 12.7 percent of total spending, while more than half of that comes not from domestic sources but from the EU. It is estimated that the EU is credited with more than a third of Greece’s economic growth. These figures do not, of course, reflect any economic catastrophe but they are, nonetheless, serious cause for concern. Indeed, this high degree of rigid expenses shows a structural deficit in the economy which could put the brakes on growth and investments in infrastructure and human capital. Long-awaited structural reforms are imperative if Greece is to free capital for investment to help it maximize future prosperity.