When the pandemic is transmitted to the real economy
By Zois Tsolis
Greece is once again confronted with a deep economic crisis.
This time it is not attributable to poor political choices as was the case for decades but rather to the inability to effectively address the repercussions of the spread of the pandemic to the real economy.
Just two months after the lockdown began Greece abandoned the era of primary surpluses and returned to the era of budget deficits and a hike in public debt.
This may be unavoidable in a deep recession but the management of and decisions regarding the crisis can either make things dramatically worse or stem the coming collapse.
According to the latest data (January-April, 2020) regarding the execution of the state budget there is a 4.06bn euro deficit as compared to the pre-coronavirus projection of 4.06bn euros and just one billion euros for the same period in 2019.
Net revenues from the state budget amounted to 14.1bn euros, a 1.34bn shortfall (8.7 percentage points as compared to the 2020 budget projection) and that is due to the impact of the lockdown and subsequent issues.
The only consolation is that due to the pandemic the revenues of the Public Investment Pprogramme amounted to 1.27bn euros - overreaching target by 153mn euros. The return of taxes amounted to 1.3bn euros, 106mn euros above target.
Nevertheless the state owes a whopping 2.17bn euros in returns of taxes/arrears, pending pensions and lump sum payments, and VAT returns and payments of invoice commissions to businesses.
That is the gaping wound of the mismanagement of state and local government funding.
One billion euros in lost revenues monthly
This situation has led to a loss of one million euros in revenues a month.