Although Greece failed in 2012 to reduce its budget deficit to 5.4 percent of Gross Domestic Product (GDP), the Finance Ministry said it lowered its primary deficit by 1.1 billion euros ($1.46 billion) more than expected.
The government was aiming to have a primary deficit, which does not include interest payments, of 4.6 billion euros ($6.12 billion), or 2.4 percent of GDP, at the end of the year. The ministry said the figures came in at 3.5 billion euros, or 1.8 percent of GDP, largely on the back of higher than planned spending cuts.
This represents a 46 percent reduction on the primary deficit for 2011, which reached 6.4 billion euros ($8.51 billion) or 3.1 percent of GDP. The state budget deficit for 2012 was 15.7 billion euros, ($20.89 billion) or 8.1 percent of GDP, which was a 31 perce
Earlier, the news agency Reuters said that Greece fell far short of meeting a target to reduce its budget deficit in 2012 to a goal of 5.4 percent, with a draft law of austerity measures sent to Parliament showing it was 6.7 percent, indicating the country’s economic crisis was even worse than thought.
The amount is the ratio of the debt to the Gross Domestic Product (GDP), a key indicator of how well an economy is faring. Greece missed the target despite unrelenting pay cuts, tax hikes and slashed pensions that have worsened the country’s recession, now in a sixth year, and made estimated tax revenues fall short of projections as many Greeks have slowed spending to a standstill, leading the closing of more than 68,000 businesses since 2010.
Greece’s 2012 primary deficit – which doesn’t include huge interest payments on debt that show the economic picture is far worse – will be about 0.2 percent, according to the draft law, within limits set out in return for a 130 billion euros ($173 billion) package agreed earlier by the other 16 Eurozone countries.
“The bigger than expected recession of the Greek economy resulted in shortfalls between the initial estimates and the final results for the fiscal year 2011. As a result of this shortfall there is a need to adjust the figures of the 2012 budget,” the law stated.
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