Greece to respond on Goldman Sachs finance deal
(ATHENS) - Greece will respond as early as Friday to a query by the EU's statistics division Eurostat on a reported financing deal with US investment bank Goldman Sachs that allegedly helped obscure debt, a finance ministry source said.
"We will send our response as soon as possible, and we will try to do it today," the ministry source told AFP.
Eurostat demanded the probe after a report in the New York Times that Goldman Sachs and other Wall Street investment firms had made financing deals with Greece that enabled it to mask the precarious state of its public finances from European regulators.
They reportedly helped it restructure its debts via complex financial instruments of the kind widely blamed for the collapse of the US housing market which sparked a global financial crisis.
Greek Finance Minister George Papaconstantinou on Monday said in Brussels that the transaction was legal at the time, that it was no longer in use and that Greece was not the only country to use "derivated contracts" to borrow money without increasing official debt levels.
Papaconstantinou's written response was likely to follow the same argument, the ministry source said on Friday.
Greece is already taking heat from Brussels over its official statistics after the Socialist government last year revealed that the country's deficit had been under-reported by the previous conservative administration.
Greece's total debt, estimated at about 300 billion euros, or 113 percent of GDP, is nearly double the 60 percent eurozone limit, while its public deficit is over four times the allowed level at 12.7 percent of output.
The Socialists have pledged to cut the deficit by four percentage points this year with a taxation and cost-cutting drive that has sparked protests and strikes from unions. A new national strike will be held on February 24.
But the EU has warned that fresh cost-cutting and tax-raising plans will be ordered should Brussels deem progress to be insufficient.
A detail of European Commission, European Central Bank and International Monetary Fund officials is expected in Greece next to review progress on fulfilling the austerity programme.
Greece's plummeting credibility was met with a triple downgrade by credit rating agencies in December at a time when the country seeks to borrow around 54 billion euros this year.
On Thursday, the ministry said it was replacing its debt management chief Spyros Papanicolaou amid reports that a new 10-year bond issue is expected later this month.
Papanicolaou will be succeeded by Petros Christodoulou, a former general manager of treasury, global markets and private banking at Greece's largest lender National Bank (NBG).
The ministry gave no explanation for replacing Papanicolaou, who had been appointed by the previous conservative government. Greek governments have a long tradition of replacing senior officials named by their predecessors.