Pandemic opens 5-billion-euro hole in Greek state budget

Pandemic opens 5-billion-euro hole in Greek state budget

Tax revenues slumped and state expenditure soared in the first five months of the year, as the government tried to tackle the impact of the pandemic. However, the Finance Ministry appears determined to offer enterprises additional support over the summer through the successful program of loans with favorable terms, dubbed the “Deposit To Be Returned.”

The budget data for the year’s first five months that were released on Thursday showed that state revenues missed their target by 2.225 billion euros or 12.6%, reaching €15.471 billion, mainly due to the decline in takings from value-added tax and income tax, given the option of payment suspension due to the pandemic and the 25% discount for timely payments.

The overrun in spending amounted to €2.271 billion for a total of €23.523 billion. This has taken the budget deficit to €7.494 billion, against a target for €2.512 billion, and compared to a deficit of €1.76 billion in the first five months of 2019. The primary deficit amounted to €4.843 billion, against a target for a primary surplus of €43 million, and compared to a primary surplus of €916 million last year.

Now sources are saying the Finance Ministry is considering a third phase of the five-year state loans to corporations, as the second phase concludes on Friday night.

A possible third phase would target the bolstering mainly of seasonal enterprises that see more than 50% of their regular annual turnover in the July-September quarter, which has left them out of the Deposit To Be Returned for the time being. This would concern all kinds of enterprises, regardless of economic sector, operating for example on the islands, such as supermarkets, food stores, vehicle rental companies etc, where turnover is concentrated in the summer months.

Estimates put the third phase below the budget of the second, which has amounted to €1.4 billion and had attracted over 123,500 up until noon yesterday. It is possible the new phase’s funds will come to about €600 million.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.