Partial ‘stop payment’, higher BoG dividend behind inflated Greek primary budget surplus in Jan-Feb

15 March 2017
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The finance ministry’s very tight spending practices at the beginning of 2017 emerged on Tuesday with the release of provisional data, amended on cash basis, which showed a 423-million-euros surplus over the first two months of the year.

Budget spending in the January-February period reached 7.909 billion euros, down 1.031 billion from budget targets, while regular budget spending was down 836 by million euros from the provisioned target, which was 7.735 billion euros.

In essence, the state’s treasury mostly stopped payment of arrears, while continuing to pay salaries, pensions and essential operating costs.
In terms of income, although net revenues were higher by 78 million euros, above the target, the figure comes as the ministry clarified that a much higher dividend was paid to the state by the Bank of Greece (BoG) in February, a sum that reached 734 million euros.

The BoG dividend, in fact, was higher by 334 million euros from the initial target.

As such, the preliminary assessment for February is that tax revenues were lower than forecast, a development that overturns successive months of the budget meeting or exceeding targets.

A partial “stop payment” and the higher than expected BoG dividend generated the primary budget surplus figure of 2.123 billion euros over the two-month period, exceeding the target by 1.259 billion euros for the specific period.

Regular budget spending was down by 393 million euros, compared with the corresponding period of 2016. Spending via the Public Investment Program was 174 million euros, also down 196 million from the specified target.

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