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Eurostat: The public deficit of Greece is 14,2% of the GDP

06 April 2010 / 12:04:13  GRReporter
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Unaccounted expenses in the amount between 3,2 and 3,4 billion euro found the representatives of the European statistical institute Eurostat after an inspection carried out during the days before Easter. The additional expenses (mainly liabilities accumulated in the health sector) are about 1,5% of the GDP and change once again the picture of the public deficit until the end of 2009. According to data of the Ministry of finance at the end of last year it was 12,7% of the GDP, however with the newly found liabilities the public deficit will increase to 14,2% of the GDP.

From the Ministry of finance they insist that the deficit is not higher than the accounted 12,7% of the GDP and the additional expenses have been verified and covered by the respective incomes in the national treasury. According to the economic observers, however if the government of PASOK does not manage to prove this statement and the real value of the public deficit increases the Greeks could expect some even stricter additional economic measures.

The financial troubles of Greece are also the reason for the visitation of a special committee from the International Monetary Fund (IMF) in the middle of this week. The committee will stay in Athens for two weeks and will provide technical assistance to the government for the increase of the efficiency in the collection of the government incomes. The consultants from the IMF will follow the execution of the 2010 Budget as well as the first results from the application of the Program for stability and development. Both of the financial programs are aiming mainly at the decrease of the public deficit. The end task of the socialistic government is to finish the year 2012 with a public deficit of under 3% of the GDP. The specialists of the international financial organization will make a verification also of the progress of the reforms in the taxation and health insurance legislation which are two of the most problematic sectors in the governmental management. “A black whole” in the budget of the social security funds and the inefficiency of the taxation system are two of the main reasons for the increase of the public deficit and the foreign debt of Greece.

The last visitation of this kind of representatives from the IMF was after an invitation made by the previous government of New democracy about five years ago. Greek economists claim that almost nothing has changed after the last visitation. A part of the recommendations of the IMF included a change in the way of collecting the liabilities towards the government, cuts of the public administration, a change in the way the planned tax audits are carried out, an improvement in the system for collection of information of the Audit office. Five years ago the unpaid liabilities to the public institutions (tax offices, health insurance funds etc.) have been in the amount of 18 billion euro. Today these uncollected incomes exceed 30 billion euro. In stead of cuts in the public sector for five years of management the government of New Democracy has appointed about 50 thousand new public employees. The Greek economic observers point out that the methods for carrying out of the tax audits have also remained with no change or improvement. Also at the end of last year it was proved in practice that the data related to the financial condition of the country provided by the Audit office are completely different than the ones provided by the Bank of Greece. Neglecting the recommendations of the IMF from five years ago makes Greece face even bigger financial difficulties today.

At the same time for Greece it becomes harder and harder to find ways to receive credits from the international markets. From the Agency for management of the public debt it was announced that the government has decided to issue Greek government bonds in dollars which would be intended to be sold to investors from the USA and Asia. According to a publication of the Financial Times the spread of the Greek government bonds on the international markets will be done by the investment intermediary agency Morgan Stanley. In the middle of April the Minister of finance Georgios Papakonstantinou will make some official visits overseas and in some Asian countries in order to support the spread of the Greek bonds. The government expects to accumulate somewhere between five and ten billion euro which have to cover the financial needs of the country until the end of May this year.

Tags: EconomyMarketsIMFEurostat
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