GREECE’S EFFORTS to demonstrate it is serious about restoring fiscal discipline will come under scrutiny tomorrow when a team of EU experts visits Athens to inspect the government’s draft economic programme.

Officials from the European Central Bank and the European Commission, which is responsible for upholding the euro zone’s fiscal rules, will assess whether the programme is likely to achieve a sizeable reduction in the budget deficit, as Greece’s socialist government is promising.

Greece rattled financial markets and annoyed other countries in the 16-nation euro zone last year by disclosing that its 2008 deficit and projected 2009 deficit were far larger than the authorities had suggested.

The world’s three largest credit ratings agencies swiftly cut Greece’s creditworthiness, and George Papandreou, the prime minister, confessed to other EU heads of government at a summit last month that part of his nation’s problem was endemic corruption.

EU officials said they welcomed Mr Papandreou’s frankness but were still deeply troubled by Greece’s fiscal woes. Greece’s public debt is expected to reach 125 per cent of gross domestic product this year, the highest in the 27-nation EU and more than double the ceiling of 60 per cent set for euro zone entrants.

Without decisive action, some economists forecast Greece’s debt could soar above 150 per cent of GDP in the next five to six years, throwing into question Greece’s ability to maintain the fiscal control required of euro zone states. – (Copyright The Financial Times Limited 2010)