Brussels, 18/03/2005 (Agence Europe) - Although public deficit in the euro zone and the EU is on the decline for the first time for four years, the data relating to public debt of Member States showed deterioration in 2004. After notifications forwarded to Eurostat by Member States for the last budgetary period, the euro zone's public deficit fell on average from 2.8% in 2003 to 2.7% in 2004 and was down in the EU25 from 2.9% in 2003 to 2.6% in 2004. On the other hand, the public debt ratio compared to GDP increased in both areas, from an average of 70.8% in 2003 to 71.3% in 2004 respectively and from 63.3% to 63.8%. Eurostat was, however, unable to validate the figures forwarded by Greece and Italy and expects that both these countries will review deficit upwards. Discussion on the registration of certain categories of spending or receipts continues with the national statistics authorities of Portugal, Latvia and Lithuania also, with, in the last two cases, possible downward revision of the public finance figures.
In 2004, the largest public deficit compared to GDP was noted in Greece (6.1% ), Malta (5.2%), Poland (4.8%), Hungary (4.5%) and Cyprus (4.2%). France and Germany each had deficits of 3.7% while Italy was at the 3% limit allowed by the Stability and Growth pact, Portugal was just below (2.9%) and the United Kingdom just above (3.2%). Only six Member States recorded public surpluses - Denmark (2.8%), Finland (2.1%), Estonia (1.8%), Sweden (1.4%), Ireland (1.3%) and Belgium (0.1%). In total, 14 Member States enjoyed an improvement in their relative budgetary situation, while in ten Sates the situation worsened. The lowest levels of public deficit in terms of GDP were noted in Estonia (4.9%°, Luxembourg (7.5%), Latvia (14.4%) and Lithuania (19.7%). Nine Member States in 2004 had a rate above 60% authorised by the Pact, the same States as in 2003: Greece (110.5%), Italy (105.8%), Belgium (95.6%), Malta (75%), Germany (66%), France (65.6%), Austria (65.2%) and Portugal (61.9%).
According to the spokesperson for the Commissioner for Economic and Monetary Affairs, Joaquin Almunia, the inconsistency between an average deficit that falls and an average debt that increases at EU level is linked to the fact that the “average calculation is based on current notifications”, while the Commission expects “revision in Greece and Italy”. These revisions could be substantial even if, at this stage, the Commission does not quantify them. Recalling that the Commission will present its spring economic forecasts on 4 April, the spokesperson added that excessive deficit procedure against Italy is not on the agenda as “one must not put the horse before the cart”.
Regarding Italy, Eurostat mainly looks at the registration of payments made by financial institutions to the public administrations (the “concessionari d'imposta” acting as tax collectors for the State), as well as the sector-specific classification of certain entities owned by public administrations (ISPA). Combined with another series of elements, the clarification of this data could lead to upward revision for 2003 and 2004, the Eurostat pres release states. Mr Almunia's spokesperson pointed out that, if a Member State does not agree with the Eurostat decision, it can challenge the decision by calling on a committee of Member State experts to give an opinion. ”This did not happen”, she said on behalf of Italy.
In the case of Greece, the Commission and Council had sent Athens formal notice to return below the 3% ceiling by end 2006. Although structural measures prescribed for 2006 were to represent at least 0.6% of GDP (EUROPE of 18 February, p.8), the Commission now considers it will be necessary to make a “bigger adjustment”, the spokesperson said. Eurostat's doubts are mainly about registration of the flows between Greece and the EU budget and revision of deficit figures for 2002 and 2003, as mentioned by Greece in its recent notification which arrived this month. This revision is linked to a new law concerning the reimbursement of hospitals' debt adopted end 2004 and concerns certain unpaid spending by hospitals that was not accounted for at the time the spending was committed. This should lead to a rise in Greece's public finance figures, Eurostat notes.
Discussions underway between the European Statistical Office and Portugal concern the consistency of data made available for the period 2001-2004. Points to be clarified with Latvia concern the registration of payments to the EU budget, and in this case clarification could lead to downward revision of the public deficit for 2004. Figures for Lithuania for 2004 and the previous years could also be reviewed downward due to the registration of refunds for confiscated goods and compensation for losses suffered during transition from the rouble to the litas.