–Adds Details, Greek Government Reaction

BRUSSELS (MNI) – Greece’s government deficit was 15.4% of GDP in
2009, nearly two full percentage points higher than the previous
estimate of 13.6%, according to fresh data released Monday by the EU
statistics agency, Eurostat.

The new estimate makes it unlikely that the Greek government will
be able to trim its deficit to 8.1% of GDP by the end of the year as
planned, although the government has said it is still committed to
reducing the budget deficit by six percentage points this year.

The “Greek government pledges to continue consolidation effort in
line with its three-year economic programme,” the Greek finance ministry
said in a statement published after the deficit data was released.

“The 2010 deficit resulting from the new revised figures and
general government accounts after the reclassification is estimated to
be 9.4% of GDP, a reduction in excess of E14 billion compared to 2009,”
it said.

Earlier this year, Greece accepted a three-year E110 billion loan
package from its Eurozone partners and the International Monetary Fund
after its high deficit and debt figures spooked investors. In return,
the government agreed to implement a four-year austerity plan under
which it had expected to trim its deficit to 8.1% this year and back
below 3% by 2014.

Greece’s deficit was 15.4% of its GDP in 2009, the Eurostat data
showed, up from 9.4% in 2008, 6.4% in 2007 and 5.7% in 2006.

The EU’s rules on deficits and debt require that member states keep
their budget deficits below 3% of their annual GDP and their total debt
below 60% of GDP.

All of the Eurozone’s 16 countries except Luxembourg are projected
to breach the deficit limit after the financial crisis flattened
economic growth and forced governments to increase spending.

In 2009, Luxembourg and Finland were the only Eurozone countries
with deficits below 3% of GDP, the data showed. Germany’s budget deficit
was exactly 3% of its GDP in 2009, the Eurostat data showed.

Countries with high debt and deficit figures, like Greece, Ireland,
Portugal and Spain, have been in the spotlight for the past year, as
traders speculated that they would not be able to manage their debt
burdens alone and be forced to seek external help.

Ireland’s deficit was 14.4% of its GDP in 2009, the Eurostat data
showed, up from 7.3% in 2008.

The costs of the Irish banking system are expected to push the
country’s budget deficit to 32% of its GDP this year. This has prompted
intense speculation that Ireland will become the next country to ask for
Eurozone/IMF help.

The Irish government has committed to getting the deficit below the
EU’s 3% limit by 2014 and has said it will strip E15 billion out of its
budget over the next four years. Excluding the banks, the deficit is
expected to be around 11% this year, still the largest in the Eurozone.

Portugal’s deficit was 9.3% of its GDP in 2009, the data showed, up
from 2.9% in 2008.

The data showed that Greece’s total debt burden was 126.8% of its
GDP in 2009, rising from 110.3% in 2008.

Ireland’s government debt was 65.5% of its GDP in 2009, up from
44.3% in 2008. Portugal’s debt was 76.1% of its GDP in 2009 and 65.3% in
2008.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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