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Ifo President Hans-Werner Sinn Accuses EU bodies of Window-Dressing Figures on Greece

May 7, 2014

Ifo President Hans-Werner Sinn accuses the EU bodies of once again fiddling the figures for Greece’s public finances. “The European statistical office removed from its database the usual data on Greece’s public deficit excluding interest payments (primary balance) a couple of days ago,” criticised Mr Sinn on Wednesday in Munich. “In this way, the European institutions are following the strategy of embellishing the financial situation of the crisis countries prior to the European Parliament elections. In truth, Greece is still far from regaining financial health. The removal of the data occurred right after the Ifo Institute had accused the European Commission of misleading the public.”

Upon request by the Ifo Institute, Eurostat said that it removed the statistical primary deficit data from the database since it is not part of the data drawn upon to ascertain an excessive deficit. “This is just a sleight-of-hand,” said Sinn. “You can just feel their guilty conscience, since Eurostat also explains how the primary balance is to be calculated henceforth. If one follows the Eurostat directions, one arrives again at the 8.7 percent deficit in the primary balance, and not at a 0.8 percent surplus, as a European Commission spokesman calculated in late April.”

“The European Commission continues with its politically motivated doctoring of the figures,” criticises Mr Sinn. In its Spring Forecast released on Monday, it indeed shows on Table 38 of the Statistical Annex the 8.7 percent primary deficit for Greece in 2013. But in the section devoted to Greece, it presents its new definition of the primary balance according to the Troika adjustment programme: “In 2013, the ESA headline balance deteriorated by almost 4 pps. to 12.7% of GDP. This deterioration was mainly driven by the one-off costs of bank recapitalisation (10.8% of GDP). Under the primary balance definition of the Economic Adjustment Programme for Greece, which excludes extraordinary items such as these costs of banking recapitalisation and other items, Greece achieved a primary surplus of 0.8% of GDP, well ahead of the 2013 programme target of a balanced primary budget.”

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