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Last Updated: Thursday, 20 May, 2004, 16:45 GMT 17:45 UK
Greek budget mess earns EU rebuke
Greece's 2 euro commemorative coin for the 2004 Olympics
Greece is attracting record criticism in its Olympic year
Brussels has administered a stinging rebuke to Greece, accusing it of an "imprudent" fiscal policy.

The European Commission pointed out that Greece and the Netherlands were in breach of the eurozone's deficit ceiling - 3% of gross domestic product.

But it singled out Athens for particularly harsh criticism, arguing that the relatively strong Greek economy should produce a sound budget.

The Commission called into question the quality of Greek economic data.

Brussels officials said they were puzzled how Greece's deficit could have been 3.2% of GDP last year, when preliminary figures in March indicated a deficit only half as big.

Failures rising

The lapses by Greece and the Netherlands mean six eurozone members have breached the deficit rules this year.

The Commission is currently attempting to crack down on fiscal sloppiness, which it argues undermines confidence in the euro.

Many countries - including some of the eurozone's biggest members - have argued that the budget rule is outmoded and unfair, and takes no account of the need to boost state spending to stimulate sluggish economies.

So far, eurozone authorities have stopped short of penalising countries in breach of its rules.

'Irresponsible and untrustworthy'

The language used in the condemnation of Greece, however, is the most severe seen to date.

George Alogoskoufis
Mr Alogoskoufis says it was all the socialists' fault
"Greece's public finances show large imbalances, inconsistent with a prudent fiscal policy," the Commission said.

The Commission pointed out that Greek economic growth had been an annual 4% in 2000-03, hinting that a declining fiscal position could only be the result of government mismanagement.

It also identified concerns over Greek public debt, which is 103% of GDP, way above the eurozone's 60% reference value.

The conservative Greek government, which ousted the socialists from power in March's elections, was quick to load the entire blame on its predecessor.

"The report is a condemnation of the previous government's policies; it points to the derailing of public finances under its irresponsible and untrustworthy policies," Finance Minister Giorgos Alogoskoufis said.

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01 Mar 04  |  Business

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