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Greece tops target with underlying budget surplus in 2013: EU

23 April 2014, 16:14 CET
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Greece tops target with underlying budget surplus in 2013: EU

Photo © vieraugen - Fotolia

(BRUSSELS) - Twice bailed-out Greece achieved an underlying budget surplus last year, beating its debt-rescue target of achieving balanced accounts, the European Commission said on Wednesday.

The primary surplus -- the budget balance before interest payments on debt -- came in at 1.5 billion euros, equal to 0.8 percent of gross domestic product, Commission spokesman Simon O'Connor said.

This outcome was "well ahead of the 2013 target for a balanced" budget which Athens had agreed with its international creditors, O'Connor said.

The improvement was a "reflection of the remarkable progress Greece has made in repairing its public finances since 2010," when it was first bailed out, he said.

O'Connor said the primary surplus was calculated on the basis that the 2013 budget deficit came in at 12.7 percent of GDP.

When interest payments equal to 4.0 percent of GDP and support payments worth 9.5 percent for the banking sector were excluded, Greece was back in surplus, he said.

The 'Troika' of the European Union, the European Central Bank and the International Monetary Fund has had to rescue Greece twice as a mountain of debt threatened to sink the economy and the euro single currency with it.

The rescues cost 240 billion euros plus an unprecedented private sector debt write-off for another 100 billion euros, in return for Athens adopting stinging austerity measures.

The country has been in recession for the past six years, compounded by the austerity programme, with the economy shrinking by about a quarter as a result.

Despite its best efforts, Athens remains saddled with debt equal to 175 percent of GDP, way above the EU 60-percent limit and raising serious doubts about whether it can manage the problem or will require another rescue.

Asked about this issue, O'Connor said Greece's "debt is sustainable" and should come down in due course in line with projections set out in the rescue programmes.

There will be a "steady and significant reduction in the debt ratio between now and the beginning of next decade," he said.

Athens would likely hold further talks with the Troika later this year on managing the debt, he added.

Reflecting the improvement in its finances and the economy, which is expected to return to growth this year, the Greek government went to the money markets earlier this month to raise funds for the first time since it was bailed out.

Athens managed to raise 3.0 billion euros ($4.2 billion) at under 5.0 percent interest in a move welcomed by its EU-IMF creditors.


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