Greece more than doubled its forecast for a budget surplus before interest payments this year, hinting at light at the end of the tunnel for its battered economy and boosting its chances of securing more leeway on its debts to the EU and IMF.
After nearly going bankrupt and almost crashing out of the euro zone last year, Greece has been buoyed by more positive economic news in recent months including a bumper season for tourism and progress in bringing its finances back on track.
In a revised budget plan for 2014, Athens confirmed it would emerge from a six-year recession with growth of 0.6 percent next year. The economy has shrunk by nearly a quarter since 2008 as it grappled with a deep financial crisis.
Athens also predicted a primary budget surplus of 812 million euros this year thanks to higher than expected tax revenues, compared to a previous forecast of 344 million euros.
Greece has been accused in the past of falsifying some budget data to secure entry to the euro zone a decade ago, but any such doubts over the current numbers have faded with the tight oversight imposed under its international bailout.
A difference in opinion on the forecasts for next year, however, is one of the key barriers to its gaining more debt relief from the European Union and International Monetary Fund next year.
“The budget takes into account the first, positive signs seen in 2013, as a result of the great sacrifices Greek society has made,” Deputy Finance Minister Christos Staikouras said.
“Achieving the revenue targets this year, in the sixth consecutive year of recession, is positive and allows for cautious but realistic optimism for next year.”
Posting a primary surplus would open the way for Greece to pursue debt relief with the EU and IMF but the lenders also doubt it will meet the budget target set in the bailout.
Greece forecasts the 2014 budget surplus will reach 1.6 percent of GDP – or about 2.96 billion euros. The bailout program provided for a surplus of 1.5 percent of GDP, or 2.75 billion euros, but the lenders say Athens may fall short of that target by as much as 2 billion euros.
Inspectors from the lenders are in the middle of their latest review, also crucial to the release of Greece’s next tranche of bailout funds. They left Athens on Thursday and plan to return in early December to continue discussions.
Greek newspaper Ta Nea on Thursday quoted Jeroen Dijsselbloem, the head of euro zone finance ministers, as saying the review must be completed quickly.
“Many eurozone finance ministers have started losing patience,” he told the newspaper. “Talks continue in Athens at this time about the country’s progress – or rather lack of progress – in fulfilling its obligations.”
Athens’ budget plan on Wednesday also maintained the target of raising 3.56 billion euros from privatizations next year and that unemployment would start to decline next year after peaking this year.
Greece has signed privatization deals worth 3.8 billion euros since June 2011, about 2.6 billion euros of which have been cashed. This is far below the 22 billion the country was supposed to have raised by the end of 2013 under the terms of its first bailout three years ago.
In the search for a new model of how to generate enough growth and tax revenue to pay for state spending, of more assistance will be a predicted 13 percent rise in tourism receipts next year to a record 13 billion euros. The industry, which employs one in five Greeks and generates 17 percent of national output, has gained market share against its international competitors for the first time in years.
“It looks like we are heading for stabilization (of the economy) in 2014, leaving the crisis behind, but there is more left to be done in terms of reforms and improving economic performance,” said Angelos Tsakanikas, an economist at think tank IOBE. [Reuters]