Greece is set to obtain more debt relief from its international lenders after European officials confirmed on Wednesday that Athens had topped its fiscal targets and achieved a budget surplus in 2013, Reuters reported.
The budget surplus is a sign that Greece is fixing its finances after four years of bailout-imposed austerity that resulted in unemployment hitting record highs of 28 per cent and wiping out a quarter of the country's GDP.
The primary budget surplus means the government in Athens can qualify for debt relief from its eurozone partners and the IMF.
EnetEnglish reported on Wednesday that data released by Eurostat earlier showed that Greece remains high in the group of EU countries with deficit problems, recording a shortfall of 12.7 per cent of its GDP (amounting to €23.109 billion) which, nevertheless, was lower than the more than 13 per cent predicted by the European Commission.
According to the Athens Macedonian News Agency the government's deficit for 2012 and 2013, based on the European Account System (ESA95), excluding the impact from supporting Greek banks, fell below budget provisions, with the shortfall totaling €3.8 billion in 2013 or 2.1 per cent of the country's GDP, a figure below the average rate both in Europe and the eurozone.
The primary budget surplus has come under scrutiny. The Guardian's Economics blog argued that the small print shows Greece's overall budget deficit in 2013 was €23 billion, of which just €7.2 billion was interest payments. That makes for a primary deficit of almost €16 billion.
Only if you exclude the cost of one-off support to the banking sector, worth 9.5 per cent of national output, and transfers from the rest of the eurozone equivalent to 1.5 per cent of GDP (from profits on Greek government bonds), does it become a primary surplus of 0.8 per cent of GDP.
The fact that this methodology is used solely for Greece speaks volumes, argues Larry Elliott for the Guardian. The country's finances are being portrayed as a success story, yet the reality is that its economy has shrunk by 23 per cent, domestic demand has shrivelled in the face of wage cuts and austerity, and a national debt worth 170 per cent of GDP will eventually require an amnesty or a third bailout.
As reported by macropolis.gr the Greek government has indicated how the surplus would be divvied up: €1 billion would go towards reducing the country’s debt, €1 billion to reduce state arrears and €500 million would be given as a “social dividend.” Furthermore, €380 million euros were due to be used to cover the gap that is expected to arise from the reduction of social security contributions by 3.9 percentage points (2.9 for employers and 1 for employees), which will be effective from 1 July.
Eurogroup President Jeroen Dijsselbloem commented: "I welcome the achieved Greek primary surplus. This is a sign that the Greek economy is on its way to recovery. And it is good news for the Greek people, whose sacrifices and efforts are now showing results.
To strengthen the positive developments, it is important that the authorities continue implementing the current programme and push forward the reform process to enhance the growth potential of their economy.
As we have said many times before, euro area member states remain fully committed to providing necessary support until Greece has regained market access, provided that Greece fully complies with the requirements and objectives of the programme.
After the summer we will further review the Greek situation and consider if succession arrangements are needed.
Statement
Press release by Eurostat: deficit and debt data for 2013
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