Friday, October 15, 2004

Not us, guv

The former Greek government is denying that it massaged the figures to enter the eurozone. They merely massaged … errrm … made mistakes in … no, that can’t be right ….miscalculated the figures after they had joined EMU.

The problem revolves round defence expenditure and not, as some of us may have supposed, the fantastic and ever growing cost of the recently finished Olympic Games. The fudging that went into that will not, presumably, be discussed for a few months. But we shall get to it, worry not.

Anyway, former economy and finance minister Yiannos Papantoniou has announced that the budget for 1997-9 is absolutely above board.

"There were no significant military orders at the time," – he said.
It is the present, conservative, government that is at fault and is, not to put too fine a point on it, cooking the books, insisted Mr Papantoniou together with two of his colleagues.

"This campaign by the new government has two aims: to discredit (the socialist party) PASOK and its tenure in office and to create an alibi for abandoning its extravagant pre-election promises," PASOK [the Greek Socialist Party] economic policy coordinator Theodore Pangalos said.
Greece’s post-2000 figures, recently revised, show that the 3 per cent deficit limit has been consistently breached and Eurostat, itself not without skeletons in the cupboard, has sent a delegation to investigate the 1997-9 figures. Mr Papantoniou maintains that they will find nothing that could discredit the socialist government or prove that Greece had not really qualified for the eurozone.

Actually, it is not entirely clear whether anything could be done even if the Eurostat delegation did find any earlier malfeasance. Can a country be thrown out after all these years without the most serious repercussions across the whole eurozone area?

So what is the actual problem? Well, it seems that previously military expenses were recorded on an accrual basis – for the year in which the material was delivered, clearly a very different one from the one in which it was ordered. The new government changed that and now records payments for the year in which the payments were made (probably different from either of the previous ones).

As AFP put it :

"Retroactively applied to spending on a huge, 10-year armaments programme running since 1999, the bulk of which was paid for in 2000-2002, the change resulted in budget deficits exceeding the three percent deficit rule."

Eurostat accepts either way of calculation but, understandably, wishes that the Greeks would make up their minds.

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