The Greek government remains dedicated to the targets of its Economic Policy Program and will take all the necessary measures to achieve them, the finance ministry said on Tuesday after an upward revision of the country's fiscal (government) deficit for 2010 to 10.5 percent of GDP from an initial forecast of 9.4 percent, which it attributed mainly to an anticipated repercussion of recession and shortfall in tax revenues.
In an announcement, the finance ministry said the divergence between Eurostat's revised figure (10.5 percent) and the initial forecast contained in the 2011 state budget (9.4 percent) for the 2010 general government deficit was due chiefly to a larger than anticipated effect of reception on GDP in 2010 and decline in tax revenues.
The ministry noted that the entirety of the fiscal data was being monitored in the context of the Excessive Deficit Procedure (EDP) by the independent Hellenic Statistical Authority (ELSTAT), the General State Accounts Office's treasury and budget general directorate and the Bank of Greece (BoG, the country's central bank). In the context of the same procedure, ELSTAT calculates the general government deficit with the European Accounting System (ESA 95) and forwards the final figures to Eurostat for inspection and release, it explained, adding that two reports (provisional and final figures) are forwarded annually to Eurostat.
The ministry also pointed out that following a series of institutional interventions by the government, chiefly the rendering of ELSTAT as an independent authority, Eurostat no longer has reservations on the Greek statistics.
The ministry further said that ELSTAT has conveyed to Eurostat the first report (provisional figures), which puts the 2010 general deficit at 10.5 percent of GDP.
According to the Eurostat report for the entire European Union released on Tuesday in Brussels, the ministry continued, Greece has the second largest deficit in the EU after Ireland (32.4 percent of GDP), and was very close to that of the UK (10.4 percent, the third highest deficit), followed by Spain (9.2 percent) and Portugal (9.1).
Greece, however, also achieved the biggest deficit reduction ever in a Euro Area country in a single year (10.5 percent of GDP from 15.6 percent in 2009).
Regarding the government (state) debt, Greece had the highest figure in the EU (142.8 percent of GDP), followed by Italy (119 percent), Belgium (96.8 percent) and Ireland (96.2 percent), the ministry said, citing the Eurostat figures.
According to the ministry, the divergence (overshooting) of the 2011 budget forecast for the 2010 government deficit is due mainly to the following reasons:
a) A larger than anticipated effect of the recession on GDP in 2010.
b) A shortfall in tax revenues (0.6 percent of GDP) resulting from a larger than predicted -- at the time of the drafting of the 2011 budget -- recession in the fourth quarter of 2010.
c) A worsening of the Local Governments (OTA) balance (0.25 percent of GDP), which is linked with payment of past obligations at the end of the year.
d) A worsening of the financial results of the Social Security Organisations (OKA, 0.5 percent of GDP), and a bigger than anticipated increase in unemployment that resulted in a reduction in social security contributions.
e) A worsening of the financial results of the state hospitals (0.3 percent of GDP).
On the other hand, the ministry said, there was an improvement in the balance of the re-classified DEKO (public utilities ands state organisations, 0.35 percent of GDP) and in the adjustment of interest rates effected (0.3 percent of GDP).
Consequently, the ministry said, it is obvious that the divergence was chiefly the result of the deeper than anticipated recession in the Greek economy, which affects tax revenues but also social security contributions.
In any event, the Greek government remains dedicated to the targets of the Economic Policy Program and intends to take all the necessary measures for their achievement, the finance ministry announcement concluded.