Rosy view gets a rethink

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Rosy view gets a rethink

Greece, like other smaller eurozone members, is not facing such severe economic problems as Germany and France. Nevertheless Eurostat revisions of its public debt figures will prompt accelerated privatization and reform of public finances.

It's not all doom and gloom in euroland. Germany and France are plainly struggling but until recently at least it seemed that the Greek economy was faring well, with a budget deficit that looked prudent compared with those of the single-currency area's two biggest powers.

Now Eurostat, the European Commission's statistical office, has produced a restatement of Greek public finances that puts more pressure on the government to reduce its high debt/GDP ratio before the economic impetus from EU transfers and the 2004 Olympics wanes.

Defiant Greek bankers and officials, though, are unwilling to interpret Eurostat's move as taking the shine off Greece's achievements in joining the euro or raising new doubts over future performance.

Conforming to Eurostat's new guidelines, Greece announced significant revisions to its 2000-03 budget and public debt figures in late October. Its projected general government budget surplus of 0.4% of GDP in 2002 turned out to be a deficit, estimated at 1.1%. Last year's 0.1% budget surplus was revised to a deficit of 1.2%, and the 2000 deficit of 0.8% widened to 1.8%.

The budget restatement was mainly the result of reclassification of capital transfers - essentially subsidies to state-owned corporations - as expenditure.

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