Eurozone public deficit up sharply in 2009

08:20, April 23, 2010      

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The public deficit of the eurozone hit a record 6.3 percent of gross domestic product in 2009, official data said Thursday

The European Union statistical bureau Eurostat said the Eurozone deficit rose from 2 percent of GDP in 2008 to 6.3 percent in 2009.

For the 27-member EU, public deficit rose to 6.8 percent or 801.7 billion euros, in 2009, compared with 2.3 percent in 2008.

The EU's Stability and Growth Pact requires member states to keep their budgetary deficit under 3 percent of GDP,but only five member states met that requirement in 2009, Eurostat said.

Ireland saw the largest deficit of 14.3 percent, followed by Greece with a deficit of 13.6 percent. The Greek government had predicted earlier that its public deficit stood at 12.9 percent of GDP.

Eurostat said the Greek deficit might even be larger due to prolonged uncertainties concerning the nation’s financial situation.

"Following completion of the investigations that Eurostat is undertaking on these issues in cooperation with the Greek statistical authorities, this could lead to a revision for the 2009 of the order of 0.3 to 0.5 percentage point of GDP for the deficit and 5-7 percentage points of GDP for the debt," Eurostat said.

Greece's public debt was estimated at 115.1 percent of its GDP.

Olli Rehn, the European commissioner for Economic and Monetary Affairs, said in a statement that the figures released for Greece call for an effective and full implementation of this year's fiscal consolidation measures pledged by the country.

"They also underline the urgency to intensify the preparations of structural reforms and additional measures for the coming years," he said.

Greece has advanced an austerity plan at the request of the EU, promising to reduce its public deficit by 4 percentage points by the end of this year.

Anaylsts said the new figures released show that the country is under more pressure to implement its austerity plan.

However, the Greek finance ministry said in a statement that Eurostat's announcement "does not alter the target for reducing the deficit by at least 4 percentage points of GDP in 2010."

"The government has already adopted all the necessary measures –in excess of 6 percent of GDP -- to ensure the achievement of this objective and is rapidly progressing on the implementation of all policy and structural changes under the Stability and Growth Program to reduce the fiscal deficit, improve competitiveness, and put the country on a new sustainable development path," the statement said.

A European Commission mission is working with the European Central Bank and International Monetary Fund in Athens to prepare a joint aid program for swift activation when asked by Greece.



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