With a primary surplus of 0.1% of GDP, the fiscal result of 2022 finally closed, according to Eurostat‘s announcement, confirming the forecasts of the economic staff and the Budget Office of the Parliament.
It is noted that the initial target was a primary deficit of 1.6% of GDP. The government is expected to revise following this development the target for the 2023 primary surplus which has been set at 0.7% in 2023.
The impressive performance of the economy sends a clear message to the markets about the progress of the country and paves the way for the recovery of the investment grade.
According to official data, from a deficit of 8.45 billion euros and -4.7% of GDP in 2021, in 2022 the primary balance of general government turned to a surplus of 273 million euros and 0.1% of GDP.
In the same period the GDP increased from 181.675 billion euros to 208.030 billion euros.
The de-escalation of the debt is also impressive. General government debt plunged more than 20 percentage points to close at 171.3% of GDP (356.2 billion euros) from 194.6% of GDP (353.4 billion euros). However, in absolute arrhythms the public debt increased by approximately 3 billion euros.
Awaiting S&P
Before midnight, S&P, which rates the country one step above investment grade and is the last house to carry out an assessment within the four years of the current government, will announce its verdict on the Greek economy. Several analysts call an upgrade to investment grade unlikely until there is a clear political picture for the next government.
Although Goldman Sachs’ recent assessment that S&P will proceed with an investment grade upgrade for Greece had raised expectations, JP Morgan two days ago sent a message that it does not expect an upgrade for Greece before the elections. The financial staff report that even if the country does not receive investment grade tomorrow, it is certain that the goal will be achieved within 2023.
The cycle of assessments for the first half of the year will close on June 9 with the second assessment of the year by Fitch. The next cycle will open again for the second half of the year, on September 8 by DBRS, on September 15 by Moody’s, on October 20 by S&P and on December 1 by Fitch.
The S&P house rates the country one step before the investment grade and is the last one to make an assessment within the four years of the current government.
Source: imerisia.gr
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**Interview with Dr. Sofia Panagiotou, Economist at the Bank of Greece**
**Interviewer**: Welcome, Dr. Panagiotou! Thank you for joining us today to discuss the recent report on Greece’s state budget. Let’s start with the primary surplus recorded for the January-October period. What does a surplus of 5.8 billion euros mean for the Greek economy?
**Dr. Panagiotou**: Thank you for having me! The primary surplus of 5.8 billion euros is indeed a significant milestone for Greece. It reflects not only improved fiscal management but also a recovery in economic activity. A primary surplus means that the government is generating enough revenue to cover its expenses, excluding interest payments on debt. This positions Greece favorably in terms of fiscal sustainability.
**Interviewer**: The report mentioned a turnaround from a primary deficit of -4.7% of GDP in 2021 to a surplus in 2022. What factors contributed to this remarkable change?
**Dr. Panagiotou**: This turnaround can be attributed to a combination of factors: strong economic growth post-pandemic, enhanced tax collection, and prudent spending policies. Additionally, the government’s support measures during the economic recovery paved the way for increased consumer and business confidence, which in turn stimulated economic activity and tax revenues.
**Interviewer**: Eurostat estimates indicated a primary surplus of 0.1% of GDP for 2022 against an initial target of a deficit. How does this affect the forecast for 2023, which initially set a primary surplus target of 0.7%?
**Dr. Panagiotou**: The better-than-expected outcome for 2022 provides a strong basis for revising the forecasts for 2023. The government is likely to reassess its budgetary targets upward, which could be an optimistic signal to the markets and investors. It suggests that Greece is on a path to reinforcing fiscal discipline while also creating room for potential investments in social and economic development.
**Interviewer**: With this positive performance, what implications might we see regarding Greece’s access to investment-grade status?
**Dr. Panagiotou**: The sustained increase in primary surpluses, alongside overall improvements in economic indicators, sends a strong message to international markets about Greece’s financial health. Achieving an investment-grade status would facilitate access to cheaper financing and could elevate investor confidence, fostering further growth and development in key sectors of the economy.
**Interviewer**: Thank you, Dr. Panagiotou, for your insights on Greece’s economic progress. It sounds like the nation is taking significant steps toward a more stable fiscal future.
**Dr. Panagiotou**: Absolutely! It is a crucial time for Greece, and if we maintain this momentum, I believe we can achieve even more substantial advancements in the coming years. Thank you for having me.
