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Greece’s new budget shows country is far worse off than previously stated

Homeless Greece 10312012
Getty Images / Oli Scarff
Greeks are hitting hard times
By Stephanie Gruner Buckley
Published This article is more than 2 years old.

At long last, the revised 2013 Greek budget is in (see Greek version here.) This is the budget that the nation’s international lenders must approve to determine whether to give Greece another €31.5 billion ($40.7 billion) in aid this month before the country goes broke. The budget (still to be approved by parliament) holds some alarming revisions from earlier drafts.

Here are some red flags:

Government debt is expected to rise to 189.1% of GDP by 2013—up from the 182.5% estimated in a budget draft from earlier in the month, and significantly more than the 175.6% figure estimated for 2012.

The government deficit is estimated at 5.2% of GDP, up from 4.2% predicted earlier—though still better than the 6.6% estimated for this year.

The revised figures mean that Greek officials no longer expect a surplus excluding debt costs of 1.1% of GDP next year. A primary surplus of 0.4% is expected instead.

The economy is forecast to contract by 4.5%, far more than the 3.8% shrinkage predicted in the preliminary draft. The recession, though, is predicted to end in 2014.

Unemployment too is expected to be at 22.4% in 2013, compared with earlier estimates of 22.8%. It stands at 25.1% now.

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