Greek deficit in 2010 higher than expected

11:00, April 27, 2011      

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Fiscal deficit of the Greek government stood at 10.5 percent of the country's gross domestic product (GDP), lower than the 15.4 percent in 2009 but markedly above the 9.6 percent previously forecast, official figures showed on Tuesday.

Meanwhile Greece's public debt grew from 127.1 percent of GDP to 142.8 percent, the highest level among the 17 European Union (EU) nations that use the euro, the EU's statistics office Eurostat said.

Greece was forced to ask for a bailout from the EU and the International Monetary Fund (IMF) in May last year after the country could not refinance its huge debts at punitively high rate in the financial markets due to its fiscal woes.

Despite the bailout, investors today remain unconvinced that Athens could get out of the sovereign debt crisis. There had been widespread speculation that the Greek government would have no other choice but to restructure its debts since the country's sluggish economy could not make up the fiscal hole.

The European Commission had predicted in the fall that Greek fiscal deficit and public debt should be 9.6 percent of GDP and 140.2 percent of GDP respectively in 2010.

For the whole euro zone, government deficit on average decreased from 6.3 percent of GDP in 2009 to 6.0 percent in 2010, while public debt increased from 79.3 percent of GDP at the end of 2009 to 85.1 percent at the end of 2010, Eurostat said.

Ireland, the second eurozone member which fell prey to debt crisis, recorded the highest deficit rate of 32.4 percent last year after Dublin had to pay a huge sum of money to save its banking sector amid a burst of the country's real estate bubble.

Public debt in Ireland also rose significantly from 65.6 percent of GDP in 2009 to 96.2 percent in 2010.

Portugal, which also asked for a bailout earlier this month, managed to reduce its fiscal deficit from 10.1 percent of GDP in 2009 to 9.1 percent in 2010, but its government debt jumped from 83 percent of GDP to 93 percent.

Lisbon was expected to wrap up its negotiations with the EU and the IMF on the terms of a bailout in mid-May, and the total bill may amount to 80 billion euros (117 billion U.S. dollars).

Germany, the largest economy in the euro zone, saw its fiscal situation worsen despite its strong recovery. The country's deficit increased from 3 percent in 2009 to 3.3 percent in 2010, breaching the EU's limit of 3 percent, while government debt swelled from 73.5 percent to 83.2 percent, also above the EU's limit of 60 percent.

For the 27-nation EU, government deficit decreased from 6.8 percent of GDP in 2009 to 6.4 percent in 2010, but government debt rose from 74.4 percent to 80 percent.

Fiscal deficit in Britain, a non-euro member, dropped from 11.4 percent in 2009 to 10.4 percent in 2010, and its government debt increased from 69.6 percent to 80 percent.

But Eurostat expressed reservations about the quality of the data reported by Britain, citing uncertainties on the time of recording of military expenditure.

"The United Kingdom does not record military expenditure on a delivery basis, as required," it said.

Among the 27 EU countries, 21 recorded an improvement in their government balance relative to GDP in 2010 compared with 2009 and six a worsening.

Estonia was the only country to see a surplus which amounted to 0.1 percent of GDP in 2010, and its government debt ratio was also the lowest in the EU, standing at 6.6 percent of GDP.

Source: Xinhua
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