Amid
financial and political turmoil,
Greece
now also faces accusations from
the European Commission that figures on the country's public debt are
unreliable and belie the country's true debt burden.
Adding to Greece's economic woes, an EU
source said today (13 January) that the European Commission was likely to take
legal steps against Athens over its unreliable reporting of its public debt and
budget deficit in October.
EU legal steps
The European Union, investors and trade
unions piled pressure on Greece as it struggled to raise funds amid concerns
about its huge debt burden and deficit.
"There will probably be another
infringement procedure [...] because providing timely and reliable statistics
is an obligation under EU law and they have failed in their obligation,"
the EU source said.
Olli Rehn, the European Union's economic and monetary affairs
commissioner-designate, told an approval hearing in the European Parliament on
Monday that Greece's fiscal woes were very serious but did not yet threaten the
euro zone (
EurActiv 12/01/10
).
Tumbling debt rating
Greece paid a high premium to borrow 1.6
billion euros ($2.34 bln) from financial markets, while bank shares fell the
most in a month and the cost of insuring its bonds rose, hit by an EU document
that cast doubt on its reporting of statistics.
The country has been pounded by
successive downgrades of its debt rating, and Tuesday's auction was the first
test of how easy it will be for Athens to continue to fund its deficit and debt
without international aid.
The European Commission said in a report
on Monday that past Greek deficit and debt figures could be revised further as
the current institutional setup for Greek statistics was seen as ineffective
and prone to political interference.
Political spillover
The new socialist government is also
under pressure domestically, and the civil servants' union announced a one-day
strike on 10February to protest against any austerity measures.
The socialists, who won the October
elections promising to tax the rich and help the poor, will present a plan to
the EU by early next week on how they plan to cut the deficit from 12.7% of GDP
in 2009 to under 3% inthree years.
Labour Minister Andreas Loverdos said
cash is so low in parts of his ministry that he would run out of money to pay
unemployment benefits this week.