Greece’s Prime Minister Costas Karamanlis blames the previous government for concealing the extent of Greece’s economic troubles, which caused a massive budget deficit of $8.6 billion, causing the national deficit to hit 5.3 per cent in 2004.
Karamanlis said, “a large part of Olympic, social and other spending was not written up in the budget. The real deficit was not recorded…the public debt exceeds even the most pessimistic of estimations”.
The Athens 2004 Games is set to be the most expensive in the modern Olympics 100-year history, reports the BBC.
The expected 5.3 per cent budget shortfall is almost twice the three per cent allowed by the European Union.
In a speech, which traditionally sets the economic agenda for the year ahead, Karamanlis said, “social policy was done with borrowed cash, military spending did not show up in the budget, debts were created in secret”.
But he added there was hope ahead through privatization, new investment and pro-competitive laws.
In justifying part of Greece excessive deficit to the European Union, Greek Economy and Finance Minister Yiorgos Alogoskoufis, who took office in March, told a news conference Monday, “I have been raising the issue of exceptional circumstances regarding the Olympics from the first time I went to the European Union. I have said that this (Olympic spending) is temporary expenditure…no economic logic suggests that large, temporary expenses, such as those of the Olympiad, should not be financed by borrowing. This has not been entirely accepted, but the climate is already changing”.
Alogoskoufis clarified that Greece was not invoking exceptional circumstances to delay putting its finances in order, promising that the public deficit will be below three per cent of GDP in 2005.
He said, “Greece is seeking no further time to adjust. We have pledged that the budget of 2005 will re-establish fiscal balance. That means that the (public) deficit will be below three per cent of gross domestic product”.
