Impressive ‘Black Hole’ of 7Bn EUR in Greece’s Budget Deficit

Posted by in Economy

Despite the emergency taxes and levies and the hikes in Value Added Tax, Greece’s Budget deficit derailed and recorded an impressive black hole of €6.886 billion in the first eleven months of 2011. “The budget deficit widened 5.1% from January to November 2011 due to deeper than expected recession” the Finance Ministry said Tuesday in a statement, explaining that the majority of state expenditure was given to insurance funds so pensions can be paid in time, to Unemployment Agency for the allowances to an always increasing number of jobless and to hospitals’ suppliers. Also revenues from emergency property tax have failed their target of €1.6 billion as just €1 billion was collected. 

In detail, the ministry announced that the deficit widened 5.1% year-on-year to EUR20.5 billion, while net revenues dropped off 3.1% to EUR43.8 billion.

On the spending side, expenditures rose by an annual pace of 6.2% to EUR62.7 billion, with primary expenses advancing 3% to EUR46.4 billion due to higher interest expenses and increased social security costs, the ministry added.

While Europe promotes budgetary discipline, Greek deficit soars again. The constant requirements for pension payments and other obligations, and the estimate that the property tax will raise only €1 billion, instead of €1.6 billion, cause jitters to the Greek government. 

“If no immediate action is taken, 2011 deficit may close at double-digit figures”, said a government official. Now, Greece focuses to achieve a target of 9.5% of GDP, not 9%. 

But the government must also convince the Troika at the tough negotiations that start on Monday on the new loan package and MoU. Greece may be requested to adopt new additional measures. 

Regarding taxation, Greece has to cover a gap of €600-700 million, due to the shortfall in property tax. In expenditure, the large deviations in funds may bring new changes in pensions. 

The Troika also examines in detail the overall divergence of public expenditure, along with the measure of labour reserve. The measure of immediate redundancies is considered the last resort, as it is a constant request of the international lenders, but Greek government fears the political cost. 

Government officials say that they will try to convince the Troika to give Greece time to adopt structural measures in the next review in February-March. However, the possibility of immediate interventions is open.  

Figure reveal that the deficit in 10-month period was €23.1 billion, exceeding 10% of GDP, while information indicates reduction in revenues by 13% in November, and arrears reaching €6.7 billion.  (

As revenues are impossible to increase in December and the deficit will most likely reach a two-digit figure, additional austerity measures are inevitable.  Therefore, I am obliged to spend all my money in having good time than to feed a barrel without a bottom, that is used to pay back creditors and protect the voters and unionists of the two major Greek parties. I consider myself and my family as somebody who never had any benefits neither from Greece’s loans, nor from the state.