Business World

Monday 23 October 2017

Greek debt crisis 'worse than ever'

The International Monetary Fund's Gerry Rice enters the Greek Finance Ministry in Athens (AP)
The International Monetary Fund's Gerry Rice enters the Greek Finance Ministry in Athens (AP)
Women's coats for sale at reduced prices as shops in Greece struggle to survive (AP)

Debt-ridden Greece is even further in the red than most people thought, experts have warned.

Its 2009 budget deficit and debt levels were much higher than previously estimated, the European Union statistics agency said, making it unlikely the country will reach targets set out in its bailout agreement.

Greece's 2009 budget deficit reached 15.4pc of gross domestic product, significantly above its previous estimate of 13.6pc, Eurostat said.

Public debt stood at 126.8pc of GDP at the end of last year, higher than that of any other EU state. In April, Eurostat had estimated the figure at 115.1pc of GDP.

The revisions are likely to mean Greece will not achieve its initial target of lowering the deficit to 8.1pc of GDP by the end of this year.

Prime Minister George Papandreou insisted last week that his government would still be able to reduce the deficit by at least 5.5pc by the end of the year, as promised. But he conceded the deficit revision would add pressure on his government to cut costs, and said Greece could seek an extension for repaying its rescue loans.

The upward revision of debt and deficit levels was widely expected since Eurostat said there were some issues with the Greek data when it released its previous estimates in April. The statistics agency said that all the issues have been addressed.

The revised data came as Greece's finance minister met the International Monetary Fund, the European Commission and the European Central Bank.

The three delegations, dubbed the "troika", were in Athens to review the country's finances, as part of regular checks of Greece's implementation of the three-year €110bn loan agreement that rescued it from bankruptcy in May.

Greece has struggled to raise revenue, with figures showing it is lagging behind its targets, although it has generally performed better in spending cuts.

The government imposed stringent austerity measures, including cutting civil servants' salaries, hiking taxes and freezing pensions, earlier this year.

The government's austerity measures led to a backlash from unions, which have organised a series of strikes and protests, some of which have turned violent.

Press Association

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