Fiscal Balance in Greece
Greece - Fiscal Balance
Greece has tough road ahead to prepare for troika’s return
Uncertainty regarding Greece’s financial sustainability is mounting not long after the country returned to international markets. The government has its work cut out for it prior to the troika’s scheduled mid-September visit to ensure that it complies with the requirements for the release of its next funding tranche. The Greek government raised EUR 1.5 billion from the sale of bond with a three-year maturity, which reached a yield of 3.5% on 10 July. The auction was held exactly three months after the government returned to the market for the first time in four years on 10 April. However, international lenders still doubt that the country can sustain itself financially through bond sales and thus avoid a third bailout. Demand for the latest bond offer was lower than expected. This was primarily due to weak sentiment in the international market, particularly in peripheral countries of the Eurozone.
Troika representatives are expected to return to Greece to conduct the fifth official review of the country’s adjustment program in the middle of September. The government must push forward six “prior actions” in advance of the review. The actions, which were agreed to in the bailout program, are key to the release of EUR 1.0 billion in funding. The Parliament is expected to vote on the multi-bill on early August.
The two hot topics during the troika’s visit will be the government’s financing gap for next year and the ways to fill it, as well as the amount of extra funds Greece will need to inject into its banks. The IMF estimates that the 2015 financial gap will be EUR 12.6 billion. Regarding recapitalization costs, a clearer figure will be available after the European Central Bank conducts its stress test in October of this year. The Greek government does not believe that it will be necessary to inject extra capital into its banks and thinks that it can cover the financing gap by using EUR 11.5 billion that is leftover from the bailout funds that were already disbursed. However, the Troika said that this proposal is unacceptable since a recapitalization buffer is still necessary.
Despite the Greek government’s intentions to gain full market access, international creditors are doubtful that the country can sustain itself financially FocusEconomics panelist do not expect the government to inject extra funds into its banks and thus forecast a government deficit of 2.1% in 2014, which is up 0.1 percentage points from last month’s estimate. In 2015, the panel expects the fiscal deficit to shrink to 1.4%.
Greece - Fiscal Balance Data
|Fiscal Balance (% of GDP)||-8.9||-13.1||-3.7||-5.9||0.7|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||5.32||-0.73 %||Oct 16|
|Exchange Rate||1.18||-0.32 %||Oct 16|
|Stock Market||766||0.57 %||Oct 16|
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September 8, 2017
Industrial production expanded a working-day-adjusted 1.7% in July compared to the same month of last year, which was a notch below June’s revised 1.8% growth (previously reported: +1.6% year-on-year).
September 7, 2017
The number of unemployed fell by 13,900 in June compared with a decrease of 8,000 in May, according to the Hellenic Statistical Authority (EL.STAT).
September 6, 2017
The number of unemployed fell by 12,700 in July compared with a decrease of 14,200 in June, according to the Hellenic Statistical Authority (EL.STAT).
September 1, 2017
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) climbed in August, suggesting the fastest rate of growth in the manufacturing sector in nine years.
September 1, 2017
A provisional dataset released on 1 September by the Hellenic Statistical Authority (EL.STAT) revealed that the economy performed slightly better than projected in the second quarter, as the expected slowdown in activity failed to come to fruition.