Greece on Friday announced its highest annual primary budget surplus since 1995, seven years before the switch to the common euro currency and during an era often plagued by nebulous statistics over state finances.
According to preliminary figures released by the now independent Greek statistical bureau (EL.STAT), whose institutional protection from government interference was another memorandum obligation, 2016 witnessed a primary budget surplus of 3.9 percent of GPD, or 6.937 billion euros in absolute terms.
The news was widely disseminated around the world and coincided with the beginning of the annual World Bank Group and IMF meetings in Washington D.C., whereas the beleaguered Greek coalition government received a welcome fillip on the fiscal front after months of gasping negotiations to try and conclude a second review of the Greek program.
The "downside", nevertheless, is the fact that the record-setting fiscal performance in the 15-year euro-era came as a result of a "tax tsunami" enacted in 2016 and pension cuts, which mainly hit the middle classes. A curtailment of state spending last year also helped, with the primary budget surplus figure improved by just more than 11 billion euros from 2015.
The still preliminary figure of 3.9 percent of GDP is based on EL.STAT's methodology (ESA 2010), and has already received a "green light" by Eurostat, with the former, in fact, expected to make official statements on Monday.
A government spokesman later said the actual figure reaches 4.19 percent of GDP for 2016, based on the definition of the primary budget surplus, as listed in the third memorandum agreement between Greece and its institutional creditors.
In a later announcement aimed to deflect sharp opposition and press criticism that the leftist-rightist coalition government essentially effected a "stop payment" over much of 2016, the finance ministry said "no government can inflate the primary surplus through a 'stop payment' and 'unpaid bills'," while referring to an "obsession" by the opposition and some of the Greek media.
The ministry claimed that the followed methodology, which is used by Eurostat, takes into account state arrears.
