Four months after the €110-billion ($140 billion) bailout for Greece, the nation still hasn’t disclosed the full details of secret financial transactions it used to conceal debt.
“We have not seen the real documents,” Walter Radermacher, head of the European Union’s statistics agency Eurostat, said in a September 2 interview in his Luxembourg office. Eurostat first requested the contracts in February.
Radermacher vows new toughness when officials from his staff head to Greece this month to come up with a “solid estimate” of the total value of debt hidden by the opaque contracts. “This is a new era,” he said.
Greece is the only euro country that lied about using these complex swap contracts after Eurostat told countries to report them in 2008, Radermacher, 58, said. It also likely signed a greater number of individual agreements than any other euro member, based on information it has provided to Eurostat, he said. Greece’s debt was 115.1 per cent of its total economic output last year, second among the 16 counties that share the euro, behind Italy’s 115.8 per cent.
“What the Greeks did was an absolute cardinal sin,” said Ruairi Quinn, former finance minister of Ireland who presided over the 1996 meeting where debt and deficit limits for countries joining the euro were set. “They deserve to be punished for it. I think they have been severely punished for it.”
Doubling deficit estimate
Greece has requested technical help from Eurostat for its statistics service, and data from the country now reflects guarantees and swaps that weren’t previously included, Finance Minister George Papaconstantinou said in an interview on Wednesday. The statistics agency became independent from the finance ministry this year.
There is “a clear political will for full transparency in everything,” he said. “There is a clear and complete break with past practices.”
Confidence in Greece’s statistics and its ability to repay debt was shattered in October, when the country more than doubled its 2009 deficit estimate. The euro plunged, sparking questions whether the single European currency could survive. It has lost 15 per cent of its value against the dollar since October 20.
Restructuring debt
Investors still don’t trust Greece. They demand yields more than five times that of Germany to hold 10-year Greek debt — a sign that buyers fear the country will have to reorganise its borrowing.
“I think restructuring will be a necessary part of them pulling out of the predicament they are in,” Andrew Bosomworth, Munich-based head of portfolio management at Pacific Investment Management Co, which oversees the world’s largest bond fund. He cited the projection of the International Monetary Fund, which foresees Greece’s debt topping out 149 per cent of gross domestic product in 2012. Italy in May estimated that its debt would be 117.2 per cent of economic output in 2012.
