Larger 2012 deficit deemed a ‘one-off’

The fiscal deficit for 2012 has come to 9.5 percent of gross domestic product and will soar to 15.2 percent of GDP this year according to official figures the government has sent to the European Commission in the context of the excessive deficit process.

The last midterm fiscal program had provided for a deficit of 7 percent for last year and 5.5 percent of GDP this year. This considerable difference with the data sent to Brussels is attributed to the funds that the state has paid or is about to pay in the context of the Greek banking sector’s recapitalization.

This variation had been expected and is of a temporary character given that the part of the deficit that is due to support being provided to local banks will not affect the state budgets of the following years and therefore the country’s fiscal adjustment, i.e. no new measure will be needed to rein in the deficit. This is a “one-off deficit,” a senior Finance Ministry official commented.

Without the funds needed for the recap process, the 2012 deficit amounts to just 5.6 percent of GDP.