Solid primary surplus by Feb 28

Budget performs well thanks to reduction in spending while industrial output grew for third straight month

The Greek economy posted a primary budget surplus of 3.5 billion euros for the first couple of months of 2014 and a solid increase in industrial output in February, although debts between the state and taxpayers are on the rise. These will be among the issues Finance Minister Yannis Stournaras will discuss with European Commission Vice President Joaquin Almunia, who arrives in Athens on Thursday.

Finance Ministry figures pointed on Wednesday to a major general government primary surplus that according to Alternate Finance Minister Christos Staikouras will boost market confidence in the Greek economy. The surplus is mostly down to the good performance of state corporations and certain state entities, as their January-February balance shows a surplus of 540 million euros against a deficit of 158 million in the same period last year.

On the central government level, the increase in the primary surplus was thanks to the 3.4 percent reduction in expenditure, while there was a 2.3 percent shortfall in tax revenues.

However state debts to the private sector have grown to 4.59 billion euros, from 4.41 at the end of January, while new debts to the state created by taxpayers in the year’s first couple of months amount to 2.35 billion euros, with 1.39 billion of that having arisen in February, the ministry figures revealed. Total expired debts to the state totaled 64.45 billion euros at end-February.

Data from the Hellenic Statistical Authority showed on Wednesday that industrial output rose by 1.7 percent on an annual basis in February, which was the third consecutive month of growth for the index. February 2013 had witnessed a 4.6 percent decline.

Besides these figures, Stournaras and Almunia are set to discuss the coverage of local banks’ capital requirements, with interest focusing on Eurobank and National. Almunia’s recent intervention against the participation of the bank bailout fund (HFSF) in the Eurobank increase – unless private investors fail to cover all of it – has created concerns in the fund about the future of its holding in its 95 percent-owned lender.