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Last Updated: Sunday, 12 September, 2004, 11:01 GMT 12:01 UK
Greek debt spirals after Olympics
The closing ceremony at the Athens Olymics
The Athens games burnt through billions of euros
Greece is facing a massive budget deficit as it tries to absorb the cost of the Olympic Games.

The expected 7bn euro ($8.6bn; 4.8bn) burden means the national deficit is set to hit 5.3% in 2004, said Prime Minister Costas Karamanlis.

He said the previous government was to blame, for concealing the extent of Greece's economic troubles.

"A large part of Olympic, social and other spending was not written up in the budget," he said.

"The real deficit was not recorded... The public debt exceeds even the most pessimistic of estimations."

Security costs

The Games is set to be the most expensive in the modern Olympics' 100-year history.

Not only did Athens have to sustain the usual cost of trying to outdo previous host cities.

Social policy was done with borrowed cash... debts were created in secret
Prime Minister Costas Karamanlis
The heightened fears following 9/11 meant that Athens was faced with a bill for security which was five times higher than that of Sydney in 2000.

In addition, much of the building work on facilities was only completed in a last-minute - and expensive - rush, in some cases just hours before the Games began.

Over the limit

The expected 5.3% budget shortfall is almost twice the 3% allowed by the European Union.

Total cumulative debt, Mr Karamanlis said, was as high as 112% of GDP or 184bn euros - or 50,000 euros for each Greek household.

Before March's election, the previous Socialist government had predicted a 1.2% deficit, with total debt of under 100% of GDP.

That was nothing short of deliberately misleading, he said.

"Social policy was done with borrowed cash, military spending did not show up on the budget, debts were created in secret," Mr Karamanlis said in a speech which traditionally sets the economic agenda for the year ahead.

But he said there was hope ahead.

Privatisation, new investment and pro-competitive laws were planned, but there was to be no shock treatment.

Mr Karamanlis promised "consultations, not surprise attacks - dialogue, not confrontation".


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