False euphoria

The falsification of fiscal figures through creative accounting has a long history and is linked with crucial political decisions. Since 1996, Greece has experienced attempts to distort public finances, which became ever more intrusive. People in the know are aware that the penchant for creative accounting after the 1996 elections was a point of friction between the government’s economic officials and the main reason for Alekos Papadopoulos’s transfer from the Finance Ministry to that of internal affairs. Papadopoulos insisted that the government should continue with fiscal restructuring that would provide the basis for broader economic reform. This effort, however, entailed clashes with factional interests that the ruling Socialists could not tolerate. Instead of a tedious and conflict-ridden reform, the government opted for the easier path of hidden debts, shallow privatizations and ephemeral stock market growth. After Papadopoulos’s removal, Dimitris Dritsas, an economist who insisted on genuine rather than virtual reform, was also removed from the General Accounting Office. Especially after 1998, pressured by the need to meet the Maastricht criteria and using its EU peers as an alibi, Greece made excessive use of creative accounting and then exploited the virtual picture for political reasons. The government summoned a myth about the economy and its prospects, and PASOK renewed its mandate in 2000 thanks to an illusory picture of economic euphoria. Deliberate idealization of the economic environment nourished a similar economic and social mentality whose consequences become evident only recently. Belated as it may be, the current revision of fiscal figures and the acceptance of hidden fiscal burdens could prompt a new course. Even so, there are still dark corners lurking in this otherwise rightful exercise that raise concerns and justify the earlier reservations.

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