Greece May Beat 2012 Deficit Target

Greece May Beat 2012 Deficit Target

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Draft BudgetGreece may end 2012 with a better-than-targeted primary budget deficit gap, although it doesn’t include sizeable interest payments, the newspaper Kathimerini newspaper reported, citing a senior finance ministry official.

The paper said Greece’s primary budget balance, which excludes debt servicing costs, is seen at around 1.3 percent of gross domestic product (GDP) in 2012 versus a target of 1.5 percent under the country’s medium-term fiscal plan.

Through big pay cuts, tax hikes and slashed pensions, Greece has been frantically trying to cut deficits and emerge from a debt crisis, applying fiscal austerity demanded by its international lenders to turn its primary budget gap into a surplus this year. “The positive development is due to the significant containment in state spending as revenues are down compared to 2011,” the paper said.

Finance ministry officials were not available for comment. Based on the government’s 2013 budget plan, Athens is aiming at a primary surplus of 0.4 percent of GDP in 2013, for the first time since 2002, although the economy is expected to shrink by that much or more in 2013.

The country’s medium-term fiscal plan and the European Commission both project a balanced primary budget this year but don’t count monies from so-called ANFA proceeds — money that Athens will get from euro zone central banks on their Greek government bond holdings, skewing the findings.

(Source: Reuters)