Rebound is set to take longer
The volume of new expired debts and suspended tax and social security obligations constitute signs of the major problems that the real economy is up against. After the immunization of the population, the Greek economy will not revert to normal as it was before the pandemic, but to a new normality with enterprises scarred by the effects of the health crisis and sky-high unemployment.
The data from the Parliamentary Budget Office show that new expired dues created over the year’s second quarter amounted to 2.1 billion euros, while the suspended dues of Q2 that will be unfrozen next year come to €1.567 billion, to say nothing of November’s and December’s suspended obligations.
The first signs of enterprises’ and individual borrowers’ fatigue were apparent from the reopening of the market after the spring lockdown: Those outside the domains that had their dues suspended were mostly unable to meet their obligations.
While before the pandemic the rate of new debt creation had declined considerably from the highs of €1 billion per month seen in the previous decade, the growth trend is back. This is set to see the emergence of more debts to the state and social security funds, as well as new nonperforming loans for banks.
While the draft 2021 budget points to a €7.9 billion shortfall in 2020 revenues, this hole is likely to stretch to more than €10 billion, as the market remains closed, tranches of rearranged dues have been suspended and the payment of road tax has practically been put off till February.
The reduction in consumption alone has already come at a cost in revenues of some €4.6 billion, and by the end of the year this is projected to rise to €5.5 billion – this is the biggest blow to this year’s budget.
According to sources, budget revenues last month were within the new targets the government set in the budget report. However, compared to the original forecasts, they are down by 20%. Finance Ministry data show taxpayers met their income and property tax obligations.
