Wednesday

22nd May 2019

Eurostat experience highlights doubts over Greek data

New figures released by the EU's statistics office – Eurostat – on Thursday (22 October), provide fresh information on EU government deficit levels for 2008, but also point towards Greek political manipulation of the country's economic data.

According to the new figures, average EU27 budget levels for 2008 were minus 2.3 percent of GDP, a further drop from the minus 0.8 percent figure recorded in 2007.

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  • Greece has revised its deficit figures for 2008 (Photo: European Commission)

But the figures come with the following caveat: "Eurostat has expressed a reservation on the data reported by Greece due to significant uncertainties over the figures notified by the Greek statistical authorities."

Eurostat officials in Brussels on Thursday (21 October) explained how, just a day earlier, they had received a new "notification" from the Greek authorities consisting of several pages of tables of revised data.

With insufficient time to fully examine the new figures, Eurostat officials were forced to include the caveat.

Manipulation?

Based on data supplied by the Greek statistics office, Eurostat in April put the Greek budget deficit for 2008 at 5 percent of GDP. Now, based on the fresh data, they put it at 7.7 percent, a jump that exceeds any other member state.

The new figures also makes Greece the holder of the largest annual deficit relative to GDP for 2008.

Observers says the revision is a clear attempt by the new Greek Socialist government, ushered in after a snap election on 4 October, to offload some of this year's anticipated national debt into last year's figures associated with the former centre-right administration.

The problem is that Brussels has seen the Greek figure-fiddling game all before and is thoroughly fed up with it.

A change of Greek government in 2004, that time from the Socialist PASOK party to the centre-right New Democracy party, brought about a similar scenario.

At a meeting of EU finance ministers earlier this week, several senior financial figures expressed their frustration at the returning story of Greek data manipulation, a phenomenon more associated with South America than the European Union.

"We want to know what has happened and why it has happened," said the EU's economy commissioner Joaquin Almunia in reaction to revised deficit figures provided by the Greek central bank, this time for 2009.

Member states have an obligation to provide accurate data to Eurostat twice a year, with exasperated agency officials explaining that it is not their job to check every local government account book in the different member states.

Funding shortage

Another problem for the newly elected Greek government is how to appease both the financial markets and the country's citizens.

With Greek coffers running low, the government is expected to turn to the market before the end of the year with a new bond issuance of several billion euros.

But investors will demand a high premium if the government is not seen to introduce deficit cutting measures, with spreads between Greek and German bonds hitting record highs this year before receding again.

Already this month, two ratings agencies have warned the new government that it must cut public spending and push through long-delayed structural reforms if it is to avoid a downgrade.

Spending cuts and tax increases however are unlikely to be popular with Greek citizens as their country enters recession while other countries appear to be returning to growth.

The election campaign saw the socialists promise a new €3 billion stimulus package, to be funded by money clawed back from tax evasion. But money saved from tax evasion is unlikely to be enough.

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