Is Greece’s first monthly budget surplus since the lockdown a further sign that the economic crisis is stabilising?

The central government posted a primary budget surplus of 1.6 billion euros in August, reducing its total year-to-date primary deficit to 6.6 billion euros from 7.5 billion euros in July. That was mostly because the government exceeded its revenue target for the month by about 700 million euros.

The fly in the ointment here is that most of this outperformance came from a bumper month for revenue for the Public Investment Budget. The turnaround here was quite remarkable, with 1.1 billion euros of PIB revenue in August, turning a 523 million-euro shortfall from the year-to-date target in July into a 226 million euro outperformance.

This PIB windfall was widely reported when the budget figures were released this week, but none of the reports I’ve seen explain where it comes from. Since we probably can’t expect it to be repeated each month, we need to focus most on tax revenues as an indicator of the whether the pandemic’s impact on private incomes and government revenues is stabilising.

There, the picture is more mixed.

The 4.4 billion euros of tax receipts in August were almost exactly the same as the target, an encouraging sign of things getting back on track after the accumulation of a 3.6 billion-euro shortfall in the previous four months.

Still, tax receipts would have been boosted by the government allowing people to pay July’s tax instalments in August. The fact that this didn’t push receipts up even further against the target is a reminder of just how delicate the economic situation is for many businesses and individuals.

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Next week’s key data

Monday:

July balance of payments data (Bank of Greece)

Friday:

Bank lending and deposits data (Bank of Greece)

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