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Greece’s Budget Execution Program

Jan-Sep 2010

As readers of Markets & Beyond know, I am closely following the implementation of the
Greek budget. Its most recent release (20 October) leads me to conclude that the
Economic Policy Program (“EPP”), which takes into account stability measures
decided in March and May and implemented since, will not be met.

At the end of September, cumulated revenues were running behind schedule

at EUR 36.5 billion whilst they should be standing at EUR 41.4 billion (EUR 55.1 billion
projected for 2010); the gap between projection and realization is widening: the latest data
from the Greek Ministry of Finance indicate that EUR 2.4 billion revenues will not
materialize with direct tax and indirect tax 10% behind schedule so far. The
growing gap between tax revenues and EPP leads me to also doubt about the GDP growth
forecast.

© Markets & Beyond

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Expenditures have been reduced more than what was planned in the EPP. However, the
Public Investment Budget (P.I.B.) is nearly 20% behind schedule, minimizing
expenditures by roughly EUR 1 billion (I am pretty sure that this one of the adjustment
variables to make the final implementation closer to projections- another one is EU grants
with EUR 2 billion left in the backburner in case over a total of EUR 3.1 billion planned for
2010…) and interest payments are well ahead by nearly EUR 2 billion and this is not going
to improve as the year goes.

Overall the improvement compared to the disastrous 2009 is obvious but trailing
projections despite the harsh measure taken by the Greek Government and money poured
y the ECB (for banks), the EU and the IMF (to match the borrowing requirements). This
leaves us with a budget deficit which should be close to EUR 21-22 billion (pending
numbers massaging by the EU and the Greeks). As stated in previous articles, Greece has
the problem with revenues more than costs; yes, they must slim down but due to the sheer
size of its debt, it is a substantial increase in revenues that will save Greece from
default/restructuring, and frankly I do not see how they can avoid it.

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Finally, on 20th October Eurostat released an update for EU 2009 budgets

deficits for all member states but Greece:

“Eurostat has completed its enquiries on statistical compilation of the Greek fiscal
data and is now undertaking a process of quality assessment of statistical source
data from public accounts, in cooperation with the Greek Statistical Office and the
Greek Court of Auditors. Following this process, and the release of the annual
report of the Greek Court of Auditors at the beginning of November 2010, Greek
fiscal data will be published by Eurostat by mid November 2010.”

On October 27, the Finance Minister, George Papaconstantinou, said a review of the 2009
budget showed the deficit was greater than 15 percent of gross domestic
product, more than the 13.6% previously estimated, and more than what he said
on October 7…

The final number will be published by Eurostat by mid November.

As for banks, it is time to stop bailing out cheaters and incompetents: imagine to what
productive use and wealth creation the trillions of wasted money could have bee channeled
to.

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Source:

Greek Ministry of Finance: Budget Execution 2010 – September

http://www.minfin.gr/content-
api/f/binaryChannel/minfin/datastore/13/22/51/1322514373507c0e5ac9891e034170478
1f4c40d/application/pdf/Budget+Execution+Bulletin-+September+2010.pdf

Greek Ministry of Finance: Presentation on Budget Execution / January-September 2010

http://www.minfin.gr/content-
api/f/binaryChannel/minfin/datastore/47/2d/e2/472de2e55ba77ae92d7972c7079c1cef80
6a66d0/application/pdf/Presentation+on+Budget+Execution.pdf

Eurostat: Euroindicators - Second notification of government deficit and debt figures for
2009
http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-22102010-AP/EN/2-22102010-
AP-EN.PDF

Bloomberg: Greek Bonds Tumble as Government Says Tax Revenue Falling Short
http://www.bloomberg.com/news/2010-10-27/greek-bonds-drop-as-tax-collection-falls-
short-of-government-revenue-goal.html