27 Feb 2010

Greece reports better finances in January

7:09 am on 27 February 2010

Greece - which is in the midst of a debt crisis - says its budget revenues in January exceeded its targets.

Net revenues rose at an annual rate of 16.6% percent, compared with a target of 10.8%, boosted by a one-off tax on big corporations.

Greece's deficit is currently more than four times higher than eurozone rules allow.

But the BBC reports the figures refer to the central government deficit, not the overall government shortfall measured under eurozone rules, so they do not show the complete picture of Greece's finances.

The crisis over Greece's huge debts has hurt the euro and raised the prospect of a bail-out by the other 15 countries that share the euro.

In another development, three German banks said they would not take on more Greek government bonds, making it harder for Greece to sell debt to pay off its debts.

Deutsche Postbank, Commerzbank unit Eurohypo and Hypo Real Estate will not add to their holdings of Greek debt.

German banks are the third-biggest creditors of Greece after banks in France and Switzerland.

Debt due

Greece needs to sell bonds in the coming weeks. It has to raise 20 billion euros in order to repay maturing debt in April and May.

A huge sell-off in Greek government debt over the past six months means that it has become much more expensive for the nation to borrow.

European Union rules state that no nation in the euro bloc should have an annual budget deficit which is higher than 3% of its gross domestic product.

Greece has pledged to reduce its deficit from 12.7% to 8.7% during 2010. Its long-term deficit-cutting plan aims to reduce the budget shortfall drastically, to less than 3% by 2012.