Testifying before a Parliamentary committee investigating claims that Greece's 2009 deficit had been deliberately inflated to pave the way for swingeing austerity cuts, Bank of Greece governor George Provopoulos on Thursday insisted that both main parties in the country had been fully aware of the risks of fiscal derailment before the 2009 elections.

In potentially devastating testimony for the PASOK party, which won the 2009 elections with the slogan 'There is money' and promises of generous government spending, he said that he had personally informed the leaders of the two main parties of the emerging problem.

He stressed that the statistics generated in the first months of 2009 were an early indication of the problems to come, being significantly larger than those in the previous year, while

economic indices in the first half of the year were a warning bell that borrowing would soon become difficult.

Though the Bank of Greece had repeatedly warned of the risks that the deficit would career out of control, the appropriate measures were not taken and the leaderships of the two main parties did not appear convinced, he added.

Finally, when Greece sent two different tables of Excessive Deficit Procedure (EDP) data to Eurostat within the space of days from two different governments, this led the ECOFIN Council to request that Eurostat carry out a detailed investigation into the weaknesses of Greek statistical methods, focusing on the state's transactions with social insurance funds, public utilities and hospitals.

Replying to questions, Provopoulos insisted that the political system had been adequately informed about the dangers threatening the Greek economy before the elections, including the risk that the deficit would rise to a two-digit figure and that he had personally informed the leaders of the two main parties.

According to the central banker, the margin for the newly elected PASOK government take action in the last quarter of 2009 that would have restricted the extent of the derailment "existed and was imperative".

Structural reform measures could have cut short the deficit's momentum and had a huge impact on markets, which would have been reassured to see the government taking measures, but this did not happen, Provopoulos added.

Questioned about the infamous statement by then finance minister George Papaconstantinou, in which he compared Greece's economy with the Titanic, Provopoulos played down the impact this might have had on financial markets, noting that markets and institutional investors did not base their assessment of a country on a minister's statement, "however unfortunate".

The Parliamentary investigation into the 2009 deficit was launched following allegations made to the press by a former board member of Greece's statistical authority ELSTAT, Zoi Georganta, that the country's public deficit for 2009 had been deliberately and artificially inflated under pressure from Eurostat and Germany.

Greece's 2009 deficit was revised upward in November 2010, from 13.6 percent of GDP to 15.4 percent of GDP, making it the worst fiscal deficit in Europe. Georganta told Greek media that this was achieved using unorthodox methods that included the spending of several utilities under general government data.

Georganta went public with her allegations after ELSTAT's entire board, with the exception of Georgiou, were summarily dismissed by Finance Minister Evangelos Venizelos in September 2011.