Greek deficit in 2013 substantial despite optimism for bond issue

THE GREEK government’s spending and tax revenue came in close to target for 2013 but the country’s deficit remains significant, despite positive headlines following last week’s successful bond issues.

The deficit excluding support for the still-troubled Greek banking system was €3.84bn (£3.17bn) last year, equal to 2.1 per cent of GDP, marginally lower than the state’s 2.2 per cent forecast.

However, including that spending, the deficit is far larger, at €23.11bn, 12.7 per cent of GDP, and 0.1 percentage points higher than the government expected.

“The country still needs to carry out structural reforms, the economy is still contracting and domestic politics still pose some risks. Greece’s debt-to-GDP ratio also remains very high,” said a BNP Paribas analyst.

However, the bank’s researchers added: “Interest costs and rollover risk are very low. Most of its debt (around 80 per cent) is to official institutions at very advantageous rates. So, Greece’s oft-cited debt sustainability issue should not be as big an issue as before.”