Brussels, 08/05/2014 (Agence Europe) - The head of the IFO institute, Hans-Werner Sinn, is accusing the European institutions of “massaging” the figures for Greek public finances ahead of the European elections later this month. He says that, in reality, Greece is still far from a return to financial health, although the European Commission announced on 23 April 2014 that the country had achieved a primary budget surplus of 0.8% of GDP in 2013 (see EUROPE 11064). IFO criticised the figures on 23 April because that same morning, Eurostat had published figures showing a primary deficit of 8.7% of GDP (12.7% minus 4% debt-servicing charges). Economic and monetary affairs spokesman at the European Commission Simon O'Connor said that that this was the definition of a primary balance set out in the Greek structural adjustment programme. O'Connor said that the state aid for Greek banks, 10.8% of GDP, had been ignored in order to take better account of the country's budget position.
IFO's criticisms were further exacerbated by the fact that, a few days ago, Eurostat removed its own figures for Greece. When contacted by IFO about this, Eurostat said that the primary statistical deficit was not used when determining excess deficits, which is why the figure was withdrawn. The European Commission says that because the two indicators, the one used by the troika and the one used by Eurostat, had the same name, Eurostat had decided to withdraw its one to avoid confusion. All the figures are, however, included in the troika's monitoring report and the Commission's Spring Economic Forecasts published on Monday 5 May. IFO criticises the lack of coherence.
In Greece, a source said that, unlike the structural adjustment programmes of other eurozone nations in receipt of financial aid, the targets for Greece were set as reductions in the primary deficit rather than the deficit as such, which would be a far more difficult target to reach. The source said that the figures did not include the calculation of the primary balance of profits made by members of the eurozone on their loans to Greece that had been paid back to the country (“SMP” and “ANFA”), thus reducing the final figure. (EL)