An investigation and subsequent indictment against the former head of Greece’s statistical bureau, EL.STAT, began in the wake of allegations by former top cadres at the semi-autonomous organization, who claimed that figures for the 2009 budget deficit were unduly inflated.
An out-of-control annual deficit, as a percentage of GDP, was one of the primary reasons that sparked the initial sovereign debt crisis in Greece, i.e. an inability to borrow at reasonable rates from the markets. The situation rapidly deteriorated and developed into the worst economic crisis in Greece since WWII, necessitating three bailouts by institutional creditors, the last of which came during leftist SYRIZA’s tenure last August.
The issue emerged on a European stage this week, with the EU Commission taking the Greek government to task over insinuations that EL.STAT’s figures were fudged over the course of three bailouts and the affiliated lending terms (2010-2015), i.e. memoranda.
One of the main accusations against former IMF economist Andreas Georgiou, who headed up EL.STAT between 2010 and 2015, was Greek economics professor Zoe Georganta, who served on the organization’s board of directors.
In September 2011 Georganta publicly charged that figures for the 2009 deficit had been artificially inflated in order to portray the Greek deficit as the biggest in Europe, with a purpose of justifying the unprecedented austerity measures taken at the time.
Given that the deficit for Ireland in 2009 stood at 14 percent, Georganta claimed that a figure of 15.4 percent for Greece was deliberately “cooked”.
The academic’s charges formed the basis for the indictment against Georgiou, which languished in court dockets over the past year until revived following a Supreme Court inquiry.
She also claimed that the board of directors did not sign off on the figures presented by Georgiou at the time.
The crux of the prosecution’s argument is that Georgiou included in the calculation for the 2009 Greek budget deficit – which ballooned to more than 36 billion euros – figures and data that were not included by other Eurozone countries. A court case will ostensibly decide the matter, although verdicts of insufficient evidence to proceed with a conviction in such complex cases are common in Greece.
On his part, Georgiou maintains, among others, that he wasn't even the head of EL.STAT when the specific figures were collected and calculated.
The issue generated a heated confrontation in 2011 between the then PASOK government under George Papandreou and the then main opposition New Democracy party, which was in power until early October 2009 and which drafted and oversaw the budget’s execution for most of the crucial year.
ND at the time also blamed the PASOK government and then FinMin George Papaconstantinou for inflating the deficit. ND pointed to the inclusion of figures to calculate the deficit – and by extension, the debt -- that were not mandatory, as well as to the tactic of listing obligations during the current year but “bumping” the collection of revenues for the next (2010).
The last annual budget draft tabled in Parliament by the New Democracy government and then FinMin Giorgos Alogoskoufis in November 2008 aimed at posting a budget deficit of 2 percent of GDP for 2009, or 5.266 billion euros in absolute terms.
What followed were successive revisions of the figure until it reached the stratospheric 15.6 percent of GDP, which came to 36.539 billion euros.
The numerous revisions of the 2009 budget deficit were, in turn, due to repeated revisions of the year’s GDP, with the last estimate given by EL.STAT in August 2016 placing the now utterly controversial figure at 15.2 percent of GDP.
