The public should have been given more details of the currency deals that allowed Greece to hide the extent of its government debt, according to a senior executive at Goldman Sachs, the bank that arranged many of them.
Seeking to deflect popular and political anger directed at its derivatives dealings with the Greek government, Goldman's managing director Gerald Corrigan told a UK parliamentary committee it had helped shave only a modest amount from Greece's official debt ratios.
Under terms of entry to the euro, member countries were permitted to run budget deficits of no more than 3 per cent of GDP and a total national debt of no more than 60 per cent.
"Governments go to some lengths to try to manage their budgetary deficit and public debt positions," Corrigan told the Treasury Select Committee.
Goldman disclosed more details of the most controversial currency swap deals in which the Greek government engaged in December 2000 and July 2001, but insisted it made little difference to the amount by which Greece breached the euro rules.
They cut the value of the country's debt by €2.4 billion ($4.66 billion), which Greece will pay back to Goldman over time, the investment bank said.
The budget deficit was 4.5 per cent of GDP in 2001 because of the swaps, instead of 4.6 per cent.
Corrigan said Eurostat, the statistics agency monitoring compliance with euro rules, tightened the rules in subsequent years.
That fact "suggests they were more liberal than they should have been in 2001", he said.
Concerns over rising Greek debt exploded into a full-blown crisis this month, as financial markets pulled down the value of the euro on fears that the Greek Government could default.
- INDEPENDENT
