Four years after the country received its first bailout, Greece has managed to achieve a primary surplus, which according to the Eurostat is expected to exceed 4.2 billion euros. In light of the upcoming local government and European elections, the developments in the Greek economy are going to be intense.
The next steps for the Greek economy are for Eurostat to recognize the “monstrous” (according to Mr. Stournaras) primary surplus in April, to revise the GDP by reconsidering military expenses as capital investments for research and for the European Commission to recognize the positive impact of the structural changes to the economy on employment.
If these three conditions are met and the country’s European partners keep their promise of providing debt relief, then Greece will be in the position to return to the international markets. This necessitates that the government can make the necessary decisions regarding the commitments it has made on commercial leases, deregulating mass dismissals and the market.
The Deputy Minister of Finances Christos Staikouras explained to To Vima that “[the troika] already recognizes that the [primary surplus] exceeds 900 million euros, it is approaching 1 billion euros. We are waiting for data from February, when revenue is going well, in order to conclude on the management of 2013. In Eurostat’s terms, the primary surplus is increased by the funds from the interest returns, the profits from managing Greek bonds in the ECB’s portfolio and central banks and income for which the Bank of Greece will provide detailed information”.
The great change in public finances is expected to become official when the GDP div is revised, as it is every ten years. According to the technical changes in Eurostat’s new accounting standards, the Greek GDP is expected to increase by about 3%.
The revision of accounting standards will reduce 2013’s rate of recession to 0.3% from 4% which was stated in the bailout end will support predictions for a 3.6% growth rate in 2014 (compared to a 0.6% troika estimate). Furthermore, the debt is expected to drop by 4.4% to bellow 120% GDP, meaning that the debt will be less than the current 124% troika estimate for 2020.
The huge change is attributed to excluding military armament expenses from estimations of the debt. Until recently, military expenses burdened the state budget and debt as Greece was a buyer of weapons systems. At the same time, countries such as Germany and France appear to have a surplus in their budget due to the sales of military supplies.
Zois Tsolis
– Originally published in the Sunday print edition
