Wednesday, April 27, 2011

Greece and Portugal debts worse than expected

April 27, 2011

Greece and Portugal are deeper in debt than previously estimated, according to official figures that show attempts to contain their financial woes have so far failed.

The statistics agency Eurostat said Greece's deficit hit 10.5% of economic output in 2010, well above the 9.6% the European commission expected last autumn. Portugal, which is negotiating a bailout similar to those for Greece and Ireland, saw its debts reach 9.1%, far ahead of the 7.3% the commission used as a benchmark until only a few months ago.

The rise in the annual debt levels are a blow to efforts in Brussels to ease growing fears among investors that Greece will be overwhelmed by its financial situation and default on hits debt.

The country had to be saved from bankruptcy with €110bn (£98bn) in rescue loans last May, but continues to struggle to raise revenue as its economy shrinks.

Most economists consider a Greek default a foregone conclusion, with either some debt forgiveness or a radically longer timetable of repayments. They argue only about the timing.


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