Olympische Spelen slaan financiële krater in Griekse begroting (en)

EUOBSERVER / BRUSSELS - After staging what was generally agreed to be an extremely successful Olympic Games in August, Greece now has to pay the bill - a bill that could see it come into conflict with the European Commission.

Greek Prime Minister Costas Karamanlis announced over the weekend that the Greek budget deficit could spiral to 5.3 percent of gross domestic product (GDP) in 2004 - smashing the EU's limit of three percent.

"The country is facing an acute financial problem that can no longer be hidden", said Mr Karamanlis on Saturday (11 September), who blames the previous Socialist government for hiding the extent of the problem.

Olympic-sized hangover

The Government has yet to release a final price tag for the Olympics, but it is believed that the bill will exceed seven billion euro, due mainly to increased security costs in the post 9/11 world and the fact that construction of many of the stadia was delayed.

Athens is thought to have spent close to a billion euro on security alone, close to five times more than was paid out by Sydney in 2000.

And the debt to GDP ratio - also a key part of the EU's economic rules - presents even gloomier reading. At 112 percent of GDP, it is nearly double the maximum permitted level of 60 percent.

Reforms to the rescue

However, Greece may be saved from Commission action - possibly leading to fines - by the proposed reforms of the euro rules currently being debated by ministers.

The new suggested rules take the individual situation of a country's economy into account when deciding how much time to allow a member state to reduce its deficit to below three percent.

And in an interview with this news site in May, the Greek Finance Minister Giorgios Alogoskouris hinted that his fellow ministers were sympathetic to Greece's Olympic task of controlling the costs.

"I made it clear to them both in the euro group and in the ECOFIN [meeting of finance ministers] ... and I think they understand ... that this is a temporary and one-off event", said Mr Alogoskouris.