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Greek debt and deficit figures to rise 'sharply': EU

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(BRUSSELS) - EU officials came up with a new shock assessment of the Greek economy on Wednesday, saying their first in-depth audit showed that the national debt and deficit were much higher than thought.

Greek national debt and deficit figures covering contested data for each of the four years from 2006 to 2009 will rise "sharply," a senior European Union official said, spelling out eight distinct sets of numbers.

"The Greek deficit and debt figures will be revised upwards, the figures will be bigger," said Amadeu Altafaj Tardio, the spokesman for the EU Economic Affairs Commissioner Olli Rehn.

Some will go up "sharply," he told a news briefing.

After the EU condemned in April unreliable data provided by Greece's previous right-wing government, the EU's data agency Euorstat secured beefed-up powers to launch on-site inspections of member countries' books.

"Several investigations" have now taken place in Greece since these new powers entered into force on August 19, but "after the latest visit, it was evident that certain errors and uncertainties remain."

Greece has been found to have provided seriously misleading data on a number of occasions in recent years, and the revelation after an election a year ago that it had concealed a recession marked the beginning of a debt crisis which threatened the cohesion of the eurozone at one point.

The latest warning by EU officials is set against a resurgence of tension of eurozone debt markets because of concern about public finances in Ireland, Portugal and Spain. On Wednesday, rating agency Fitch downgraded Irish debt.

The spokesman gave a date of October 22 for Greek authorities to come clean on past mistakes and cover-ups, setting an "ultimate deadline" of mid-November before finalisation of the country's 2011 budget.

The spokesman added that Rehn was reinforcing resources on the ground in Greece so as to leave "no stone unturned" in the "urgent task" of discovering the true extent of Greek debt.

As Europe moves towards new forms of cross-border economic governance in a bid to better compete with global rivals, the deadweight of debt is a "heavy burden" for future generations that threatens to hold back all of Europe, the spokesman also implied.

A Greek finance ministry official said on Tuesday that Greece's 2009 public deficit could exceed 14 percent of output according to the review being carried out by Greek and EU authorities.

He stressed that the increase would not have a significant effect on the 2010 deficit, but did not indicate that revisions would be applied on debt and deficit levels for each of the four years involved.

In a draft budget approved by the government on Monday, the public deficit is put at 7.8 percent in 2010, an improvement on the target of 8.1 percent set initially by the EU and the International Monetary Fund.

The EU and the fund last May approved a 110-billion-euro (152-million-dollar) rescue for Greece over three years to help the country cope with its crisis.


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