European Union finance ministers today agreed to pursue a formal warning process against Greece after revelations that the country's budget deficit has far exceeded an EU limit since 1997.
The ministers agreed at talks in Brussels to adopt the European Commission's recommendation made last month that the next step of an 'excessive deficit procedure' be launched against Greece, sources said.
Under the procedure, the EU executive now has a month to propose new recommendations for Greece to rectify its finances and get the deficit under 3% of gross domestic product.
The EU warning procedure comes after drastic revisions to Greek budget data showed the deficit to have been well over the limit since well before the country adopted Europe's common currency in 2002.
The commission expects the Greek deficit to have amounted to 5.3% of GDP in 2004 rather than the 3% foreseen last March. It says that prospects for meeting the target in 2005 are also dim. The finance ministers decided that Greece 'is not in compliance' with an earlier warning over its deficit issued in July 2004, according to a draft statement.
'This is partly due to statistical revisions and to expenditure overruns associated with the organisation of the Olympic Games, as well as to overruns in some other spending items and shortfalls in certain revenue items, which had not been correctly estimated in the 2004 budget,' the statement said.
'In addition, the Council of Ministers considered that, given the high deficit outturn in 2004 and other budgetary risks, the excessive deficit may persist in 2005,' it added.
But the EU ministers did welcome pledges by Greece's conservative government to put its budgetary house in order. The government has blamed its Socialist predecessor for falsifying the sensitive deficit data in the past.
