Greece braces for new cuts on reports of higher deficit

Greece braced for the possibility of fresh austerity measures after Sunday newspapers reported its public deficit for 2010 was far greater than previously estimated. Both Kathimerini and Eleftheros Typos newspapers said the deficit for 2010 was 10.6 percent of gross domestic product, which would be 1.1 percent more than the 9.5 percent previously thought.
The finance ministry refused to comment but Finance Minister George Papaconstantinou had already acknowledged Wednesday that deficit would be "higher than 9.5 percent", without saying by how much.
"The 'bill' now rises to eight billion euros ($11.3 billion) in additional fiscal measures the government must take to save this year's budget from a complete derailment," conservative newspaper Eleftheros Typos said.
Media speculation about the data began Saturday with Kathimerini citing sources saying the Greek statistics authority had informed its EU counterpart Eurostat of "a shortfall of 10.6 percent rather than 9.5 percent".
"Greeks are set to endure a further bout of austerity measures after it emerged that figures sent by Athens to the European Commission on Friday indicate that the public deficit for 2010 was about one percent greater than previously thought," Kathimerini said.
The finance ministry said it would not comment before Eurostat publishes the official figures on April 26 but it did not refute the press reports.
"Given the need to safeguard and further consolidate the credibility of the country's statistics, the Finance Ministry will not comment or confirm such reports before the official announcements by the institutional bodies responsible," it said in a media release.
Experts from the European Commission, European Central Bank and International Monetary Fund (IMF) are due in Athens next week to evaluate Greek fiscal policy.
They will also discuss future steps to be taken by the government, which is due to announce by mid-April its medium term (2012-2015) budget strategy, and how the country will raise 50 billion euros from privatisation by 2015 to reduce part of the ballooning debt.
Papaconstantinou has said Greece could buy back some of the debt provided enough money were raised from state asset sales in the programme to be detailed mid-April.