Greece takes gold for debt

After the Olympics' successful homecoming, the host nation is wondering: "Was it worth it?"

    Massive Olympic debt may dwarf the infrastructure benefits

    The smallest nation to host modern television-age Games faces a total bill of up to 10 billion, six percent of GDP and some 900 per head.

    So Greeks are justified to ask if they will ever get their money's worth.
       
    Ask the government and the answer is a resounding yes. 
       
    The Games' success and a radical revamp of the nation's infrastructure are a first-class ticket to prosperity brought by booming tourism and foreign investment, officials say. 
       
    Room for doubt

    Ask economists and they say Olympics are like any investment - it may pay off in the future, but you do not know for sure.
       
    "The whole venture must be seen as a fairly high-risk investment - complete with cost overruns and extravagant spending - which will prove (or not prove) its worth later," said EFG Eurobank in a recent report. 
       

    "The whole venture must be seen as a fairly high-risk investment - complete with cost overruns and extravagant spending"

    EFG Eurobank report

    Today it is certain that Greece will have a bigger debt, a gaping budget hole, some top-class infrastructure, many top-notch venues it has yet no use for, and hopes that Olympic accolades will be a boon for the economy.
       
    Economists say Greece will escape a feared post-Games slump if the government wastes no time and shifts as promised its public investment budget to new projects that can take up the slack created with the end of Olympic works.   

    Debt concerns

    But debt overhang caused by construction cost overruns and record-high security bill can act as a brake on growth, probably forcing the government to put off promised tax cuts.
     
    "The post-Olympics fiscal clean-up is more like a marathon than a 100-metre dash," Standard & Poor's rating agency said this month.

    It rates Greek debt with mid-investment grade A and warned Greece risked a credit downgrade if it failed to act.
       
    Greece got a yellow card from Brussels last month after its 2003 deficit topped the European Union's cap of 3% of gross domestic product. Since then it has revised the figures up to 4.5% this and last year.

    SOURCE: Reuters


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