Deficit seen at over 5% of GDP

Deficit seen at over 5% of GDP

Emergency government spending to mitigate the effects of the pandemic, combined with reduced revenue, will result in a 2020 budget primary deficit in excess of 5% of the country’s GDP, Alpha Bank’s research department estimates.

When it published the budget late last year, months before the pandemic broke out, the government was hoping for a primary surplus – that is, excluding interest payments on the debt – of around 3.6% of GDP.

But the effects of the pandemic and the spring lockdown resulted in revenue being 13.6% lower than budget estimates, while spending exceeded estimates by 16.3%.

Excess spending was due to transfers, such as compensation to employees and the reductions and exonerations in pre-paid tax, as well as increased spending from the Public Investment Program to finance compensation to professionals and businesses.

Greece has a very high debt (196.4% of GDP at end-2020), but with a relatively low profile; gross financing needs for the next two years are around 9.5% of GDP. The average maturity of the loans is 20.2 years and the average interest rate of 1.93% is low.

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.