Greek budget deficit 13.6 percent of GDP in 2009

[April 22, 2010]  LONDON (AP) -- Financially-stricken Greece had an even bigger budget deficit for 2009 than previously thought, official figures showed Thursday -- at a time the country is considering whether to tap a bailout facility from its 15 partners in the eurozone and the International Monetary Fund.

The European Union's statistics office Eurostat said that Greece's budget deficit in 2009 as a percentage of economic output was 13.6 percent -- that's up from the previous estimate of 12.9 percent and nearly double the 7.7 percent recorded in 2008.

Greece's government total debt as a proportion of GDP stands at a massive 115.1 percent, a burden so large that some analysts think it will have trouble paying it over coming years even if a bailout saves Athens from default this year.

Eurostat also warned that the Greek figures may actually be even worse, citing "uncertainties" over the figures related to social security funds and the recording of complex financial swap arrangements.

"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 year 2009 of the order of 0.3 to 0.5 percentage points of GDP for the deficit and 5 to 7 percentage points of GDP for the debt," Eurostat said.

Greece began talks Wednesday with the IMF, the European Central Bank and the European Commission on details of a rescue package to deal with its debt crisis.

The talks are expected to last at least ten days and are set to focus on the terms and conditions of the joint eurozone-IMF bailout plan agreed in Brussels earlier this month so the package can be activated quickly if Greece requests the aid.

Eurozone countries have pledged euro30 billion ($40.5 billion) in loans for this year but have not spelled out any longer-term commitments.

Athens has said it would prefer to continue borrowing on the international market, but its borrowing costs have skyrocketed and are prohibitively high -- the spread between Greek and German ten-year bond yields remains excessive at over 5 percentage points.

The Eurostat figures also showed the difficult state of government finances across the EU -- Ireland, which has enacted tough pending cuts, had the highest deficit across the 27-nation EU at 14.3 percent of gross domestic product.

The lowest was recorded in Sweden, where the budget deficit was only worth 0.5 percent of the country's GDP.

In total, the eurozone government deficit to GDP ratio increased from 2 percent in 2008 to 6.3 percent in 2009. For the 27-nation EU, the deficit swelled from 2.3 percent to 6.8 percent.

Regarding the overall debt burden, the ratio for the eurozone increased from 69.4 percent at the end of 2008 to 78.7 percent at the end of 2009, and in the EU27 from 61.6 percent to 73.6 percent.

[Associated Press; By PAN PYLAS]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.