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19th Aug 2017

Greek records first surplus as EU moves closer to balanced budgets

Cash-strapped Greece recorded its first primary budget surplus in a generation last year, according to data released by Eurostat on Wednesday (23 April).

Excluding interest on its debt repayments and a number of one-off measures to prop up its banks, Athens recorded a surplus of €1.5 billion, worth the equivalent of 0.8% of its economic output in 2013. Despite this, Greece still recorded an overall deficit figure of 12.7 percent, up by 4 percent on the previous year as the crisis-hit country endured a sixth straight year of recession.

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  • Greece is entitled to better terms on its €240 billion bailout after recording a primary surplus (Photo: Constantine Gerontis)

The surplus, which was achieved a year ahead of the schedule set out in Greece's rescue programme, means that it is entitled to further debt relief on its €240 billion bailout. Talks on debt relief, which is likely to involve lengthening the maturity of Greece's loans to up to 50 years, will start among eurozone finance ministers following May's European elections.

Commission economics spokesman Simon O'Connor said that the figure was "well ahead of the target for 2013 for a balanced primary budget," adding that it was "a reflection of the remarkable progress that Greece has made in repairing its public finances since 2010".

"The country and its economy are in a much better position now, after very tough years for households and businesses," said Greece's deputy finance minister, Christos Staikouras in a statement.

O'Connor also told reporters that the EU executive would make revised forecasts for Greece's debt burden in a report published on Friday.

"We are of the view that Greece's debt is sustainable provided that the programme is implemented," he added.

Meanwhile, Slovenia assumed the position, previously held by Greece, of running the highest deficit across the bloc at 14.7 percent, having also had to pump in large amounts of public money to save its banking sector from collapse.

Overall, EU countries moved closer towards balancing their budgets in 2013 for the fourth consecutive year, with the average budget deficit across the eurozone falling from 3.7% in 2012 to 3 percent, and from 3.9 percent to 3.3 percent across the entire EU.

The data, published by the bloc's statistical agency, means that the average deficit is within the limits set out by the EU's stability pact for the first time since the 2008-9 financial crisis.

The best performing country, Luxembourg, recorded a small budget surplus, closely followed by Germany which ran a balanced budget. A further sixteen EU countries kept their deficits within the 3 percent threshold set out in the pact.

But despite close to five years of budget austerity, government debt burdens in Europe continue to climb. The government debt to GDP ratio in the eurozone increased from 90.7 percent at the end of 2012 to 92.6 percent at the end of 2013 and to 87 percent across the EU.

Six EU countries - Greece, Italy, Ireland, Portugal, Cyprus and Belgium - have a debt burden worth more than 100 percent of their annual economic output, with Greece, at 175 percent, having the highest debt mountain.

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