economics

January 16, 2010

Greece condemned for falsifying data

Filed under: Uncategorized — ktetaichinh @ 6:34 am
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By Tony Barber in Brussels

Published: January 12 2010 13:59 | Last updated: January 12 2010 17:23

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// ]]>Greece was condemned by the European Commission on Tuesday for falsifying data about its public finances and allowing political pressures to obstruct the collection of accurate statistics.

In a damning report ­published as the eurozone grapples with its worst financial crisis since the euro’s launch in 1999, the Commission said figures from Greece’s were so unreliable that its budget deficit and public debt might be even higher than government had claimed last October.

At that time Greece estimated its 2009 deficit would be 12.5 per cent of gross domestic product, far above 3.7 per cent predicted in April. It revised its 2008 deficit up to 7.7 per cent from 5 per cent.

The data shocked and angered Greece’s 15 eurozone partners and prompted swift downgrades of Greek debt as well as an increase in the premium demanded by financial markets to buy Greek bonds.

The socialist government is promising to slash its deficit to 3 per cent or less by 2012, but financial markets question whether it can introduce the drastic austerity measures implied by such a target without sparking labour unrest and social disorder.

The Greek finance ministry said the Commission report reflected the approach of previous governments, not the current one. “We’re in the process of changing the way statistics are collected and analysed,” it said.

Separately, an International Monetary Fund technical team arrived in Athens on Tuesday in response to a Greek request for help with a radical overhaul of the tax system due to be completed in March.

“There is absolutely nothing on the agenda about loans and borrowing [from the IMF],” the ministry said. It dismissed speculation the government might turn to the IMF for assistance if the public finances deteriorated.

The Commission, which is responsible for upholding the eurozone’s fiscal rules, made clear in its report that it had next to no faith in Greek statistics. “The current set-up does not guarantee the independence, integrity and accountability of the national statistical authorities,” it said.

The Commission denounced “poor co-operation and lack of clear responsibilities between several Greek institutions and services … diffuse personal responsibilities, ambiguous empowerment of officials, absence of written instruction and documentation, which leave the quality of fiscal statistics subject to political pressures and electoral cycles”.

The report listed categories in which, it said, Greece had deliberately misreported financial data last year, including revenues from abolished extra-budgetary accounts, swaps write-offs, adjustment for interest payments, European Union financial grants and hospital liabilities. Hundreds of millions of euros were involved in each case.

George Papandreou, Greece’s prime minister, sought at a December summit to regain the confidence of his EU colleagues, acknowledging that corruption was a national disease and vowing to make the statistics agency politically independent.

However, other EU countries have not forgotten that Greece massaged its public finance data to ensure that the country qualified for eurozone entry in 2001.

According to the Commission report, Greece overstated the surplus of its social security sector by €2.8bn between 2001 and 2003.

The Commission warned of more trouble ahead, saying that Eurostat, the EU’s statistics office, had not yet validated the data Greece submitted in October.

“A substantial number of unanswered questions and pending issues still remain in some key areas, such as social security funds, hospital arrears, and transactions between government and public enterprises,” it said.

“These questions will need to be resolved, and it cannot be excluded that this will lead to further revisions of Greek government deficit and debt data, particularly for 2008, but possibly also for previous years.”

The Commission said EU fiscal data were generally of high quality and Greece represented a one-off problem. However, it cautioned that it lacked audit powers and so relied heavily on the goodwill and integrity of member-states to supply accurate data.

Saving the euro from a Greek tragedya

EU nations press Greece’s austerity program to save euro from debt crisis domino effect

http://finance.yahoo.com/news/Saving-the-euro-from-a-Greek-apf-2746087217.html?x=0

Anestis said the planned strike in February would be the first of many, and called on the government to stimulate the economy rather than increasing taxes that would affect those on low incomes.

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