Doubts about Greece 'starting to lift'

(ATHENS) - A climate of doubt against debt-hit Greece and its questionable statistics has started to lift among EU states after two days of talks in Brussels, the Greek finance minister said on Wednesday.

"I left the meeting with the feeling that the climate against Greece is starting to change, and that we are slowly starting to build confidence," Finance Minister George Papaconstantinou told a news conference.

Papaconstantinou this week promised fellow EU finance ministers a shakeup of national statistics after the recently-elected Socialist government shocked Brussels in October by announcing that the country's deficit had been under-reported by its Conservative predecessors.

On Wednesday, the minister said that a damning European Commission report on Greece's statistics earlier this month had been a "slap in the face" and that the credibility shortfall had hurt the country on borrowing markets.

The three main credit rating agencies -- Fitch, Standard and Poor's and Moody's -- have successively downgraded the country's sovereign debt standing. Moody's yesterday said it was maintaining a negative outlook on Greece amid doubts over its chances.

Athens needs affordable loans as it aims to borrow over 50 billion euros (72 million dollars) this year but the credit downgrades have raised the risk factor of Greek government bonds for potential investors.

Last week Greece sold 2.08 billion euros in six-month and one-year treasury bills. On Tuesday it raised another 1.56 billion euros in 13-week bills.

Greece has a public spending deficit that rose to 12.7 percent of output last year, far above the 3.0 percent ceiling for countries that use the euro.

It is also saddled with a debt constituting 113 percent of gross domestic product (GDP).

A number of Greece's eurozone peers have criticised Athens as its financial woes have put strong strain on the euro in recent weeks.

The European Commission sought permission Tuesday to check data sent by EU governments concerning their deficits to avoid a repeat of cases like that of Greece, accused of playing down its debt.

The EU's executive arm will propose next month that the bloc's statistics office, Eurostat, be allowed to "carry out audits" on information provided by national governments, Economic and Monetary Affairs commissioner Joaquin Almunia said.

The Greek government last week unveiled a "front-loaded" three-year crisis blueprint to cut back a public deficit of over 30 billion euros and rein in government debt estimated to exceed 294 billion euros this year.

The plan aims to save more than 10.3 billion euros in 2010 with improved tax collection, cost cuts and reduced arms spending to bring the public deficit to 2.8 percent of output by 2012.

Council conclusions on the Commission report on Greek government deficit and debt statistics (English)

2990th ECONOMIC and FINANCIAL AFFAIRS Council meeting (provisional version) - Brussels, 19 January 2010