Page last updated at 10:49 GMT, Wednesday, 13 January 2010

EU casts doubt on Greece economic figures

Euro notes
Greece is seen as one of the eurozone's weak links

An EU report has condemned what it calls "severe irregularities" in Greek accounting procedures, as the country struggles with a huge budget deficit.

The EU's statistical office, Eurostat, deplored the fact that Greece revised its budget deficit last year from 3.7% of total output (GDP) to 12.5%.

It said political interference meant Greece's data could not be relied on.

The report comes as the International Monetary Fund explores ways to help Greece get its accounts in order.

Athens is planning austerity measures and says it is not seeking an IMF loan.

The BBC's Malcolm Brabant in Athens says that even the IMF's limited involvement is highly sensitive because of market speculation that, despite Greece's protestations to the contrary, it may ultimately require an international bail-out.

Overshooting EU targets

At 12.7% of gross domestic product (GDP) Greece's deficit is far above the 16-nation eurozone ceiling of 3%.

Greece is also burdened with debt amounting to 113% of GDP - nearly double the eurozone limit of 60%.

The European Commission relies on EU member states' accurate reporting of economic data, because it does not have the power to audit their accounts.

Eurostat says Greece must address "institutional weaknesses" and introduce "proper checks and balances," otherwise "the reliability of Greek deficit and debt data will remain in question".

The EU has put Greek fiscal data under "intense scrutiny" since 2004, the report says, yet the quality of the data still lags behind the level of other member states.

In 2009, Eurostat says, Greece submitted incorrect data and did not respect accounting rules.

Greece failed to make its statistical institute - the NSSG - and its General Accounting Office independent from the finance ministry, it says.

Such weaknesses allowed the quality of the data to be "subject to political pressures and electoral cycles", it says.

Eurostat complains of "unanswered questions" in key parts of the Greek budget - social security funds, hospital arrears and transactions between the government and public enteprises.

The new socialist government of George Papandreou, which took office in October 2009, has blamed the previous conservative government for the accounting debacle.

The President of the European Council, Herman Van Rompuy, visited Athens on Tuesday and voiced confidence in the government's plans to tackle the deficit.

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