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On 11 January 2010, the European Commission’s Eurostat issued a report on Greek government deficit and debt statistics .
Click  to download the complete report (30 pages).
Summary
This report responds to the ECOFIN Council conclusion of 10 November 2009 which invited the Commission to prepare a report on the 'renewed problems in the Greek fiscal statistics.'
On 2 and 21 October 2009, the Greek authorities transmitted two different sets of complete Excessive Deficit Procedure (EDP) notification tables to Eurostat, covering the government deficit and debt data for 2005-2008, and a forecast for 2009. In the 21 October notification, the Greek government deficit for 2008 was revised from 5.0% of GDP (the ratio reported by Greece, and published and validated by Eurostat in April 2009) to 7.7% of GDP.
At the same time, the Greek authorities also revised the planned deficit ratio for 2009 from 3.7% of GDP (the figure reported in spring) to 12.5% of GDP, reflecting a number of factors (the impact of the economic crisis, budgetary slippages in an electoral year and accounting decisions).
According to the appropriate regulations and practices, this report deals with estimates of past data only.
Revisions of this magnitude in the estimated past government deficit ratios have been extremely rare in other EU Member States, but have taken place for Greece on several occasions. These most recent revisions are an illustration of the lack of quality of the Greek fiscal statistics (and of macroeconomic statistics in general) and show that the progress in the compilation of fiscal statistics in Greece, and the intense scrutiny of the Greek fiscal data by Eurostat since 2004 (including 10 EDP visits and 5 reservations on the notified data), have not sufficed to bring the quality of Greek fiscal data to the level reached by other EU Member States.
As the report shows, the revision in the Greek government deficit statistics are due to two different but in some instances linked sets of problems: problems related to statistical weaknesses and problems related to failures of the relevant Greek institutions in a broad sense. The first set of problems concerns methodological weaknesses and unsatisfactory technical procedures in the Greek statistical institute (NSSG) and in the several other services that provide data and information to the NSSG, in particular the General Accounting Office (GAO) and the Ministry of Finance (MOF). The second set of problems results from inappropriate governance, with poor cooperation and lack of clear responsibilities between several Greek institutions and services responsible for the EDP notifications, diffuse personal responsibilities, ambiguous empowerment of officials, absence of written instruction and documentation, which leave the quality of fiscal statistics subject to political pressures and electoral cycles.
The problems faced in Greece go well beyond what can be tackled using only the statistical monitoring tools available to the Commission, which according to the Council Regulation 479/2009 does not have audit powers. In spite of the concerted and consistent efforts carried out by Eurostat services since 2004 to ensure respect of the applicable rules and methods, the situation can only be corrected by decisive action of the Greek government.
The Greek authorities need to tackle resolutely not only the outstanding methodological issues, but also and crucially they need to put in place transparent and reliable working practices between the national services concerned, and to revise the institutional setting in order to guarantee the professional independence and full accountability of the NSSG and of the other services involved in the domain of EDP data. Unless the institutional weaknesses identified in this report are addressed and proper checks and balances introduced, the reliability of Greek deficit and debt data will remain in question.
The Commission is fully committed to continue cooperating with the Greek authorities with a view to supporting their efforts to improve the collection and processing of government statistics in order to address the existing shortcomings and restore confidence in Greek statistics.
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