Athens Olympics Seen Costing More Than Double Initial Target

The Athens Olympics (search) will cost a total of almost $12.1 billion (10 billion euros), more than double the original target, pushing Greece's budget gap well above EU limits, finance ministry sources said on Wednesday.

The original Games budget was set at 4.6 billion euros, but a rising security bill and overruns in construction costs have prompted several upward revisions in recent months.

"The estimate is that the total cost of the Olympic Games will be close to 10 billion euros, mainly due to overruns in spending," the official, who declined to be named, told Reuters.

"For example, the costs of security will exceed the 1 billion euro target," he said.

The official said it was not clear yet how much Greece would need to contribute to NATO (search) for its help in protecting the Games. Also bills for a myriad of services provided during the Olympics, such as transportation for the athletes and guests, would land after the August 13-29 Games ended, he said.

Within the last two months the Greek government has twice raised its cost estimates, first to 6 billion euros, and last week to more than 7 billion. Deputy finance minister Petros Doukas has also warned higher costs will push Greece's budget deficit above 4 percent of gross domestic product this year.

On Wednesday another finance ministry official said that following a deficit overshoot last year and higher-than-planned spending this year the 2004 budget shortfall was set to come around 4.5 percent, well above the European Union's (search) three percent limit.

The head of Greece's statistics service told Reuters last year's deficit was seen at 4.4-4.7 percent.

The conservative New Democracy government, which took over the reins after March general elections, has blamed the frantic race to complete the Olympic venues after years of delays and the costly security operation for the overshoot.

Greece has budgeted an unprecedented 1 billion euros to protect the first Olympics since the Sept. 11, 2001 attacks on the United States.

But opposition socialists, who helped Athens win the Olympic bid and lost power just five months before the Games, say the current government is inflating the costs by including projects only loosely linked to the Olympics.

They argue that by exaggerating the state's fiscal woes the government is trying to avoid fulfilling its campaign pledges of increased spending on health and education.

"I don't agree with that number, it's a New Democracy practice to show higher spending by including works not related to the Olympic Games such as new metro lines," Costas Kartalis, a senior member of the socialist PASOK party and former official in charge of Olympic preparations.

The European Commission has already warned Greece was set to breach the European Union's three percent limit and gave it until November to propose measures to rein in deficits by 2005, but when it issued its warning it predicted only a moderate overshoot.

($1=.8271 Euro)