The euro sank nearly 0.5% against the US dollar this morning, after the European Union revealed that Greece’s budget deficit was worse than initially estimated last year, saying the country’s deficit could top 14% of GDP for 2009 as a result of off-market swaps.
‘Eurostat is expressing a reservation on the quality of the data reported by Greece, due to uncertainties on the surplus of social security funds for 2009, on the classification of some public entities and on the recording of off-market swaps,’ the agency said. Eurostat revised Greece’s deficit for 2009 up to 13.6%, exceeding the government’s April 7 estimate of 12.9%. Ireland’s deficit was also revised upward to 14.3% today. ‘The focus has moved from liquidity concerns to one where the market is discounting a debt restructuring or possible default,’ said Lee Hardman of Bank of Tokyo-Mitsubishi. ‘There is also the risk of contagion to other countries, the risks are very much skewed to the downside.’