Primary surplus chokes market

21 April 2017
289 Views

The state’s fiscal performance last year has exceeded even the most ambitious targets, as the primary budget surplus as defined by the Greek bailout program, came to 4.19 percent of gross domestic product, government spokesman Dimitris Tzanakopoulos announced on Friday. It came to 7.369 billion euros against a target for 879 million euros, or just 0.5 percent of GDP.

A little earlier, the president of the Hellenic Statistical Authority (ELSTAT), Thanos Thanopoulos, announced the primary surplus according to Eurostat rules, saying that it came to 3.9 percent of GDP or 6.937 billion euros. The two calculations differ in methodology, but it is the surplus attained according to the bailout rules that matters for assessing the course of the program.

This was also the first time since 1995 that Greece achieved a general government surplus – equal to 0.7 percent of GDP – which includes the cost of paying interest to the country’s creditors.

There is a downside to the news, however, as the figures point to overtaxation imposed last year combined with excessive containment of expenditure. The amount of 6-6.5 billion euros collected in excess of the budgeted surplus has put a chokehold on the economy, contributing to a great extent to the stagnation recorded on the GDP level in 2016.

On the one hand, the impressive result could be a valuable weapon for the government in its negotiations with creditors to argue that it is on the right track to fiscal streamlining and can achieve or even exceed the agreed targets.

On the other hand, however, the overperformance of the budget may weaken the argument in favor lightening the country’s debt load. It is no coincidence that German Finance Minister Wolfgang Schaeuble noted in Washington that over the last couple of years, Greek government deficit forecasts are more realistic than those of the International Monetary Fund.

ELSTAT data showed on Friday that the general government debt came to 314.8 billion euros, or 179 percent of GDP in 2016, up from 177.4 percent in 2015.

You may be interested

FYROM name dispute meeting in Vienna ends
DEFENCE
shares8 views
DEFENCE
shares8 views

FYROM name dispute meeting in Vienna ends

Panos - Apr 26, 2018

“We are committed to trying to find a solution to the name issue of FYROM”, the UN special mediator on…

Tsipras-Juncker meeting in Athens
GREECE
shares14 views
GREECE
shares14 views

Tsipras-Juncker meeting in Athens

Panos - Apr 26, 2018

Greek Prime Minister Alexis Tsipras on Thursday will receiving EU Commission President Jean-Claude Juncker at his Maximos Mansion office. According…

Eurostat: ‘Severely materially deprived’ people in Greece at 21.1% of population
GREECE
shares7 views
GREECE
shares7 views

Eurostat: ‘Severely materially deprived’ people in Greece at 21.1% of population

Panos - Apr 26, 2018

Eurostat this week calculated the number of "severely materially deprived people" in Greece at 21.1 percent of the country's population,…

Leave a Comment

Your email address will not be published.