New data published by the European Union statistics office, Eurostat, suggest Germany hasgot more fiscal worries than Greece.
Eurostat’s data shows government contingent liabilities - debts the public sector is not yetobliged to pay back now, but may need to in the future. These include public guarantees toprivate sector entities like banks and public-private partnerships (PPPs), contracts where thegovernment commits to buying future services in exchange for companies building andrunning infrastructure.
What the data suggests may come as a surprise.
The EU’s paymaster Germany has a massive 145% of gross domestic product. As for crisisstricken Greece, it’s just 17%.
As regards the sum of total contingent liabilities and formal government debt, Germany has adebt of 222%. This is 30 percentage points more than Greece.
According to a report in the Financial Times, Germany’s whopping contingent debt pile is largely attributable to the liabilities of public banks. These include KfW, at the federal level, the statebanks (Landesbanken) and the municipal savings banks (Sparkassen).
The Financial Times quotes David Heald, a professor of accounting at the University ofAberdeen. He explains that two other columns in Eurostat’s release stand out as potentiallymore interesting. These refer to the “government guarantees” and the “outstandingliabilities related to off-balance PPPs”. Once you sum up these two figures, thenumbers for most countries become significantly smaller. Austria and Ireland top the leaguewith liabilities worth around 35% of GDP. Germany’s 18% is still higher than Greece’s10%, but looks tiny compared to the overall number.
According to Heald, these figures offer an insight into the kind of financial wizardry whichgovernments have become embroiled in as they try to massage their public accounts andrespect official deficit and debt limits.
“With governments increasingly squeezed financially, what you find is an increasing use of offbalance sheet items, including guarantees and PPPs,” he said.
http://www.neurope.eu/article/greece%E2%80%99s-public-debt-problem-smaller-than%E2%80%A6-germany%E2%80%99s