Greece may face more cuts

The European Commission said today it could call on Greece to take additional measures to reduce its budget deficit but that …

The European Commission said today it could call on Greece to take additional measures to reduce its budget deficit but that it was waiting for a mid-March evaluation of the government's steps to assess the situation.

“There should be a first report available in mid-March and that should allow us to make a more in-depth evaluation of the measures which have been proposed by the Greek authorities, including additional measures, as well as the budgetary impact of those measures,” a Commission spokesman told a regular briefing.

“There is a process that needs to be followed that should allow for the necessary adjustments to be made, and if it is necessary, the Commission can call for additional action to be taken,” the spokesman, Amadeu Altafaj, said.

Mr Altafaj said Greece was also being asked to explain reports, in the US and German press, that it had engaged in derivatives contracts with US investment banks that had allowed it to reduce its deficit and debt figures.

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According to a report in the New York Times, one contract allegedly involved Greece selling forward its future receipts from lottery ticket income and airport landing fees in exchange for cash that was used to write down debts.

Mr Altafaj said Greece had not informed Eurostat, the EU's official economic statistics agency, about any such transactions and had asked for more information from Athens.

“I want to state that Eurostat was not aware of such transactions," he said. "But I can tell you that Eurostat has, indeed, following these reports, already requested the Greek authorities for an explanation by the end of February.”

Asked if the derivatives trades that Greece is alleged to have engaged in fell within EU budget rules, Mr Altafaj said: "We need the information on what kind of transactions took place, if they did, and what was the effect on the government accounts of Greece.

“This allegedly took place in 2001. This is something that we don't have the information (on) yet and we have requested. Based on that information we will make an assessment.”

Reuters