Primary budget deficit widens by 15%, exceeds 10-bln-euro mark

Greece’s primary budget deficit in the first 7 months of the year widened 15.5% compared to the corresponding period of 2020, as recorded on a cash basis by the Bank of Greece, exceeding, for the first time this year, the 10-billion-euro mark. Although public revenues have risen, spending has jumped by 3.5 billion euros, mainly due to increased support measures for businesses and households.

"The cash result of the central government", as announced by the Bank of Greece, "showed a deficit of 13.078 billion euros, compared to a deficit of 12.767 billion euros in the corresponding period of 2020. During this period, the regular budget revenues amounted to 24.111 billion from 22.283 billion last year. As for the regular budget expenditures, they amounted to 35,999 billion euros, from 32,423 billion euros in the period January-July 2020 ".

The data published by the BoG also reveal the most serious fiscal impact of the pandemic, completely overturning the government’s tight fiscal policy, with a high primary surplus, which was formed in 2019. In particular, while in 2019 Greece had a primary surplus of 3.209 billion euros, according to the cash flow methodology from the BoG, in 2020 showed a deficit of 18.887 billion euros. That is, the impact of the pandemic on the budget exceeded 22 billion euros.

As the BoG stated in its latest Monetary Policy Report, the primary deficit in terms of enhanced supervision was projected to fall to 3.9% of GDP this year from 7% of GDP in 2020. However, the extension of support measures in the first months of the year led to a revision of estimates, and it was predicted that the deficit this year would be 5.3%. However, 7-month data, in combination with the additional expenses that will be made by the state funds for the support of the fire victims, show that in 2021 we are heading to a higher primary deficit.

According to the Ministry of Finance, the state budget expenditures for the period January - July 2021 increased compared to the corresponding period of 2020 by 4.726 billion euros, mainly due to increased expenditure on anti-pandemic measures and increased defense spending. The support measures have so far cost Greece about 6.3 billion euros.