Greek Debt is Out of Control, Report Says

According to the newly-formed State Budget Execution Monitoring Office in Athens – staffed by independent analysts – a significant increase of debt, a high primary deficit and the deep recession have boosted to the extreme the dynamics of  Greek debt – and it is now spinning out of control, they write in a report, quoted by the Greek news paper Kathimerini, Friday.

“What does the EU do with a country that is unwilling to undergo change and structural reform, because there is a lack of political will, of functioning administration and of support of the population?”

 Frankfurter Allgemeine Zeitung

The Greek economy is shrinking at an alarming rate, offsetting the impact of the first EUR 159 billion bailout loan, according to the reports. But Greek finance minister Evangelos Venizelos states that the report lacks validity of equivalent international reports. 

Venizelos last week admitted that Greece is likely to contract by more than 4.5% this year, worse than an earlier 3.5% forecast.

Meanwhile, Greece’s debt has ballooned to over EUR 350 billion.

The deficit has climbed to EUR 15,5 billion by July, compared to a target of EUR 16,68 billion for the entire year.

Greek deficit reached EUR 15,5 billion in July, at the same time the economy is contracting by 4.5%.

To make up for revenue shortfall, Greece raises VAT by 10 percentage points on food and restaurants.

Parts of state revenue included in this year’s calculations will not be collected until early 2012.

To make up the shortfall, the authorities on Thursday raised VAT for food at restaurants and hotels by ten points to 23%.

The restaurant sector has described the measure as ruinous and some operators have threatened to withhold the tax to avoid closing down altogether, www.eurointelligence.com reports.

Separately, the Greek Finance Ministry says it will publicize the names of taxpayers who has owed the state more than 150.000 euros for over a year, according to another article in the Greek news paper, Kathimerini.

“Greece is a Lost Cause”

After the Greek parliament’s admission that the Greek debt has spun out of control, Frankfurter Allgemeine Zeitung’s economics editor, Holger Steltzner,  urges the euro zone in a front page editorial to wake up to the fact that Greece is a lost cause.

“The public service and the private sector have ballooned as a consequence of living on debt and they are not competitive and that is why the ‘rescue billions’ will disappear”, Steltzner asserts.

“What does the EU do with a country that is unwilling to undergo change and structural reform, because there is a lack of political will, of functioning administration and of support of the population?” the German editor writes.

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