Public firms’ debts raise worries
The high debts of Greek public companies that are underwritten by the state are threatening to swing the economy back under the watchful eye the European Union’s excessive debt procedure. The government is worried about the possibility of the 11 billion euros of state-guaranteed debts incurred by companies such as the Hellenic Railways Organization (OSE) being entered on the ledger of public debts, which would take the budget deficit back to about 7 percent of gross domestic product (GDP). Just when the EU statistics agency, Eurostat, is recalculating the Greek deficit and the country’s economy is at risk of another painful excessive debt process by exceeding the limit of 3 percent of GDP by some tenths of a percentage point, the state firms’ debts could prove explosive for the country’s fiscal efforts. The incorporation of such debts on the country’s deficit would definitely lead to a revision of Greece’s credit rating as well. For years, Eurostat has unofficially applied pressure on Athens for the incorporation on the deficit of debts that public firms cannot possibly cover and the state has guaranteed. These currently amount to about 4.5 percent of GDP. The EU statistics agency has always considered that this was something that would have to be settled at some point but has stopped short of stating it in official terms. The most characteristic case for Greece is that of OSE; its accumulated debts total almost 8 billion euros, of which 6.8 billion euros has been guaranteed by the state. This amounts to 2.7 percent of GDP. The Economy Ministry is currently examining how other European countries have handled this problem. The most likely scenario is for the state to undertake the debts of OSE and begin a strategic plan of restructuring and partial privatization, extending payment of its debts by 30-40 years. These final decisions will have been made by the end of this year.
