Monday, August 12, 2013

Greece Swings to a Budget Surplus

Wall Street Journal
August 12, 2013

Greece's fiscal discipline efforts appear to be paying off, according to budget data released Monday that showed the country turning last year's steep deficit into a surplus, potentially bolstering its case for further debt relief from international creditors.

But other data highlighted how much the steep spending cuts have cost the country. The Greek economy contracted by 4.6% in the second quarter, dragging out a painful recession that began six years ago, government figures showed.

Although the shrinkage was slower than in previous quarters, it added to doubts as to whether Greece will be able to return to growth in 2014 as forecast, and start lowering record unemployment rates.

Euro-zone officials have promised to help Greece reduce its debt pile if it lives up to its vows for tighter budgets, improved tax collection and a restructuring of its broken economy. But the German government—with elections less than six weeks away—again rejected the prospect of any additional debt relief for Athens, despite the new data.

The Greek Finance Ministry reported a primary surplus—which excludes interest payments on debt as well as local government and social security spending—for the first seven months of the year.

The surplus reached €2.6 billion ($3.5 billion) against a deficit of €3.1 billion a year earlier.


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