Greece pressed to explain currency deals

CRISIS-HIT Greece has until tomorrow to explain a series of complex financial deals that masked the nation's debt.

Reports indicate that US investment bank Goldman Sachs arranged a currency swap that allegedly allowed the government to hide the extent of the deficit.

The New York-based firm helped Greece raise $1 billion (about 63 million) of off- balance-sheet funding in 2002 through the "secret" swap, which EU regulators said they knew nothing about until recent days.

Such transactions often play a part in government refinancing, but it has been claimed in this case the bank devised a "special" swap with "fictional exchange rates".

The EU commissioner for economic and monetary affairs, Olli Rehn, said he wanted the Greek government to explain how it used currency swaps and how that affected debt and deficit figures.

EU finance ministers also gave Greece a deadline of 16 March to outline big spending cuts to bring the deficit down from the EU's highest, 12.7 per cent of economic output, to 8.7 per cent this year.