UPDATE 1-Greek budget expert quits after finmin comments -sources

Thu Sep 1, 2011 2:15pm EDT

Related Topics

* Chief of parliament's budget experts resigns

* Experts' report had criticised government

* Finance Minister had attacked the report (Adds details)

ATHENS, Sept 1 (Reuters) - The chief of an independent Greek budget committee resigned on Thursday after the country's finance minister attacked the group for saying debt dynamics were 'out of control', sources said.

The resignation may further complicate debt-choked Greece's already difficult negotiations with its international lenders about the disbursement of further aid tranches under a 110 billion euro ($156 bln) rescue package agreed last year.

The parliamentary experts' committee, headed by economist Stella-Savva Balfousia, said on Wednesday that Greece's debt dynamics were out of control and that the government was failing to restore public finances.

The committee also urged the government to redouble efforts to fight tax evasion and reduce primary deficits, in view of a recession that was worse than expected -- a demand also likely to be made by the inspectors from the European Union and International Monetary Fund currently in Athens.

Finance Minister Evangelos Venizelos on Thursday scathingly attacked the committee. "Yesterday's report lacks elements of credibility of other international reports," he said in a statement. "All necessary measures will be taken to upgrade and improve the credibility of the committee," he added.

Balfousia stepped down later on Thursday after Venizelos's comments, parliamentary and top government sources said. "She has submitted her resignation to the parliament speaker," one official said.

The committee was appointed by the Finance Ministry in 2010 as part of efforts to increase the transparency of the country's murky finances.

Balfousia, who was not available to comment, was also a key player in a previous panel of experts, which had unearthed statistical irregularities and manipulations used to conceal the true state of Greece's finances. ($1 = 0.702 Euros) (Reporting by Harry Papachristou; Editing by Ruth Pitchford)

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