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Europe

Greek finance minister rejects alarming debt report

Video by Kyle G. Brown

Text by News Wires

Latest update : 2011-09-01

Greece’s finance minister Evangelos Venizelos (pictured) Thursday rejected a report that suggested the country would likely miss budget targets, saying the body that issued the damning report lacked experience and responsibility.

AFP - The Greek finance ministry backpedalled on Thursday after a new budget watchdog released an internal report warning that debt was "out of control" just as officials held critical talks with creditors.

Finance Minister Evangelos Venizelos, who had enough troubles this week explaining Greece's reform delays and target slippage to auditors from the EU, the IMF and the ECB, attributed the error to inexperience.

"All responsible international organisations know in which way macroeconomic and fiscal reports are compiled, checked and published," Venizelos said in a statement.

"It is clear that the budget office still lacks this knowledge, experience and responsibility," the minister said.

The report, excerpts of which were reported by the semi-state Athens News Agency on Wednesday, warned that the dynamic of Greece's enormous debt is "out of control".

It said that slippage on meeting deficit targets, exacerbated by a deep recession, threatened to cancel out the benefits of a new EU bailout.

"A significant debt increase, a high primary deficit and the deep recession have boosted to the extreme the debt dynamic, which is now out of control," the newly-formed State Budget Execution Monitoring Office, staffed by independent analysts, said in a report.

"These developments seem to offset to a great extent the positive impact" of the latest EU loan package of 159 billion euros ($229 billion) agreed last month, it added

Venizelos insisted on Thursday that the document "lacks the validity" of equivalent international reports.

Greece is currently undergoing an EU-IMF-ECB audit which will determine whether it will be given the latest portion out of an earlier 110-billion-euro loan that pulled the country back from the brink of bankruptcy last year.

Held down by cutbacks, the Greek economy is shrinking at an alarming rate, wotj Venizelos last week admitting output will likely contract by more than 4.5 percent in 2011, up from a 3.5 percent forecast.

The Greek debt, in the meantime, has ballooned to over 350 billion euros.

Greek reports said senior representatives from the three organisations who arrived on Monday to head the audit, have noted delays in the application of the recovery programme, particularly in sectors that threaten to raise strong union protest.

"The coming weeks until October 15-20 are very critical and serious," Venizelos told Real FM radio in an interview on Wednesday.

The public deficit -- the source of Greece's economic ills -- is also running dangerously high, coming in at 14.69 billion euros in the first half of 2011 compared to a target of 16.68 billion for the entire year.

To make up the shortfall, on Thursday the authorities raised sales tax for food at restaurants and hotels by ten points to 23 percent.

The restaurant sector has described the measure as ruinous and some operators have threatened to withhold the tax to avoid closing down altogether.

 

Date created : 2011-09-01

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