UPDATE: ECB's Trichet Presses Greece To Cut Budget Gap
ATHENS -(Dow Jones)- European Central Bank Governor Jean-Claude Trichet said Monday that Greece must make a serious commitment to cutting its budget deficit and overhauling its system for collecting data on the Greek economy.
His remarks, in a pre-taped interview with Greece's ANT1 television station, join a chorus of criticism by European Union officials in recent weeks over Greece's ballooning fiscal gap and its shoddy statistics.
Greece recently revealed that its budget deficit this year will climb to 12.7% of gross domestic product--the highest in the euro zone and more than double what the country had forecast just two months earlier.
"If the statistics are credible and the number is so dramatic, then I believe... that it is necessary for you to commit to a very serious plan for consolidating your economy," Trichet said in the interview.
Greece has come under intense European Commission scrutiny since it made public the size of its deficit in mid-October.
Since then, European Economic and Monetary Affairs Commissioner Joaquin Almunia has repeatedly rebuked Greece for failing to meet its deficit targets; while Jean-Claude Juncker, the head of the informal Eurogroup group of euro-zone countries, has criticized the country for its poor statistics.
On Wednesday, the European Commission is expected to recommend that Greece be placed under heightened supervision for its excessive deficit. According to Eurostat, the statistics agency of the European Commission, Greece will have the highest budget deficit among the 27 European Union member states this year, surpassing other big budget offenders like Ireland and Spain.
The new Socialist government, elected in a landslide victory on Oct. 4, last week unveiled its first draft budget that aims to cut the deficit to 9.4% of GDP in 2010. But it said it will need three to four years to meet a European Union-mandated deficit ceiling of 3% of GDP.
A chronic past violator of E.U. budget deficit rules, Greece has met euro-zone budget targets only once since joining the currency bloc in 2001. It is also on track to report a debt ratio of 124.6% of GDP next year, the highest level projected for all of the 27 E.U. member-states.
Speaking in French, Trichet described Greece's budget deficit as "not at all normal" and stressed the problems Greece faces with servicing its enormous debt burden and the consequent borrowing costs for private companies.
"If you don't take the necessary measures in the fiscal area, then the interest payments for the refinancing of your debt will rise all the higher," Trichet said.
"Further, the companies of those countries (with high debt burdens) labor under expensive loans...and that is a tremendous problem," he added.
According to the draft 2010 budget, the Greek government will spend EUR12.95 billion next year--more than 5% of GDP--to service its debt.
-By Alkman Granitsas, Dow Jones Newswires; 30-210-331-2881; alkman.granitsas@dowjones.com
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Publié le 09 novembre 2009 Copyright © 2009 Dowjones
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