Monday, July 6, 2015

Has The Syriza Government Been Fiscally Irresponsible?

According to commentator after commentator, especially on lots of blogs, that is certainlhy the case. Those nasty, lazy, corrupt, good-for-nothing Greeks just want to have it all as shown in the horrible irrational and irresponsible No vote on their referendum, having been doing nothing but running primary budget deficits and demanding bailouts from their troika creditors, who have been offering them highly reasonable deals that they should just shut up and accept or else have their government step down and be replaced by an appropriatedly kowtowing responsible one.  Among those pushing the line that they have been running nothing but primary budget deficits has been Tyler Cowen at Marginal Revolution, most recently posting a link to a Ricardo Hausmann Faecbook post that states "It has been running primary deficits..." with no modification, with Tyler, having made such a claim earlier and being told that he was misrepresenting things thinking that this post would somehow vindicate his inaccurate position.

So, of course there is a lot of confusion and we cannot know for sure what is going on, but in fact official data is in on the budgetary situation of Greece during the first quarter of 2015 during which the Syriza government was in power, supposedly irresponsibly running massive primary deficits and otherwise showing why they should be removed from power, the awful commies.  But, whoooops! if one looks at the official data, it turns out that not only did the government run a primary surplus during the first quarter, but that this surplus increased from about 770 million euros in the last quarter of 2014 to about 1.19 billion euros in the first quarter of 2015, a more than 400 million euro increase in that supposedly nonexistent primary surplus, as reported by phantis just yesterday, (actually April 2) although there have been earlier reports coming in with roughly similar numbers, with little of this getting much media or other attention anywhere.

Now it must be admitted that this outcome includes some one-off elements unlikely to continue.  There is also the unfortunate fact that the Greek economy has fallen back into a recession, which is likely to worsen in the near future.  So, tax revenuse are likely to fall, and it may be as Tyler Cowen stated in an earlier post that "the primary surplus is gone."  But at least one report I found made a projection for the second quarter (actual numbers not in yet for that quarter just ended) that showed a primary surplus still holding in the second quarter and even into June, although much reduced from the first quarter.  I would note that one item people have pointed to has been an incentives program the government put in place to encourage those in arrears on paying past taxes to come in out of the cold, a one-shot deal. Best estimate I saw of that amount for first quarter was 147 million euros, helplful, but less than half of the increase in the primary deficit from the previous quarter, with reduced spending responsible for more of it, despite all the caterwauling to the contrary by so many very self-righteouss outside critics.  As it is, while those making those tax arrears payments not returning to do so again, the incentives program remains in place, so there may still be more arreared taxpayers coming in from the cold in the future.

Greece may well have gone into primary budget deficit territory by now (or shortly will do so), but those claiming that it has been just running primary deficits all along are misinformed and misinforming when they repeat this falsehood.  They should all go check the actual data before repeating this drivel further agains.

Barkley Rosser


buermann said...

"as reported by phantis just yesterday"

That Phantis report is from April 20th. said...

Thanks, buermann. It gave yesterday's date on the top, but you are right. it was originally from April 20. Most of the other stories on this date from around then.

Unknown said...

Syriza gets blamed for all Greek governmental action back to 2009 by folks who suggest the solution to the problem is to replace Syriza with the same parties (and Parties) who were in power from 2009 to 2014.

Is there a way to make sense of this proposition? Why yes there is. In 2009 commercial banks and private investors were massively exposed to Greek debt. And under the governments in power most of that exposure was erased by debt service extracted from the unemployed young and pensioners in the process of shifting the holders of debt from the private sphere to the public.

Northern Europe, with the active assistance of PASOK and NDP, re-fi'd a whole bunch of debt while being able to charge the refi 'fees' back to the Greek people. Why WOULDN'T they want to replace the No-niks of Syriza with the Please-Sir-Can-We-Have-Another-niks who represent the Greek elites.

NOW it makes sense.