EU report blasts 'unreliable' Greek economy statistics

(BRUSSELS) - The European Commission has published a damning report on Greece's "unreliable" economic figures, increasing the chances of the EU executive launching infringement proceedings against Athens.

The report on Greek government deficit and debt statistics highlights the general "lack of quality of the Greek fiscal statistics" and "failures of the relevant Greek institutions in a broad sense."

Greece, which is mired in recession, has a public spending deficit that rose to 12.7 percent of output last year, far above the 3.0 percent ceiling permitted to countries sharing the euro.

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

The report said the Greek statistics office NSSG had complained of political interference in the financial figures sent to the EU executive last October.

The commission highlighted two widely differing sets of figures on Greece's excessive deficit, sent by Athens to Brussels on October 2 and October 21.

In the second set of estimates the Greek authorities revised the country's planned deficit ratio for 2009 from 3.7 percent of GDP to 12.5 percent.

"Revisions of this magnitude in the estimated past government deficit ratios have been extremely rare in other EU member states, but have taken place for Greece on several occasions," the report complained.

It also cited "a substantial number of un-answered questions" in key areas including social security funds, hospital arrears, and transactions between government and public enterprises.

The EU Commission, which drew up the report following a request by EU finance ministers in November, spoke of "deliberate misreporting of figures by the Greek authorities in 2009."

The EU nations have asked the commission to propose appropriate measures to be taken to address the situation.

This will happen within the next days or a week, a commission official said, without giving a date.

The commission will put forward its proposals in the context of an EU treaty rule under which Athens could face sanctions such as the suspension of European Investment Bank loans and ultimately fines.

The EU's new permanent president Herman Van Rompuy visited Athens Tuesday and said Greece was now taking steps to meet the "substantial" challenge posed by its huge debt and public deficit.

"I am confident that the Greek government is already taking the necessary further steps to address the situation," the EU chief said after meeting with Greek Prime Minister George Papandreou.

Greek Finance Minister George Papaconstantinou said in an interview with the German newspaper Handelsblatt to appear Wednesday that his government had carried out a thorough re-examination of its finances.

"There is no skeleton in the closet," he told the paper.

"We have re-calculated everything again, taking into account hospital debt, higher costs and a decline in receipts last year. It's a solid basis for reducing the deficit in the years to come."

The recently elected Socialist government, which must present its crisis plans to the EU executive commission by the end of the month, has said it will get the deficit down to 8.7 percent in 2010 by cutting state spending and fighting tax fraud.