Pandemic throws Greece’s budget off-target, hurts recovery

Greece’s budget deficit has widened due to the effects of the coronavirus pandemic, which has slammed the key tourism sector and is pushing the country into recession.

The Finance Ministry said Thursday that the primary deficit figure for the state budget, the balance before debt servicing costs, stood at 4.84 billion euros ($5.41 billion) in the first five months of the year. In the first four months, it was 1.52 billion ($1.7 billion).

Greece has delivered primary budget surpluses for the past five years as part of its commitments to European Union bailout lenders, but creditors have agreed to relax those conditions this year due to the crisis.

With its strong reliance on tourism, Greece is headed back into a major recession this year. Finance Minister Christos Staikouras said Wednesday that the government expected the country to suffer a contraction of 8% of gross domestic product in 2020 with a whopping 16% downturn in the second quarter of the year. Greece had originally expected its economy to grow by 2.8% with the recovery gathering pace after years of financial crisis and recession.

State budget calculations do not include budgets for local government and social security.

Source:ekathimerini.com