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Greek Current Account Surplus Widens

James Boston
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Greek Current Account Surplus Widens

The recent publication of the 2015 draft budget for the Greek economy has revealed that the country is set for a primary surplus, before interest payments, for the second year in a row. This projection is made all the more credible by the release of the August Current Account figures this morning which show an expanding surplus, the latest year on year Current Account measurement is showing a figure of €1.825Bn compared to just €1.683Bn in July.

The passing of the draft budget was just one of a number of economic and political hurdles for the government of Antonis Samaras. Last week the Greek stock market crashed by almost 6.5% in one day while 10 year bond yields spiked 100 points to over 7.8%. There are two reasons for this renewed turmoil in Greek markets. Firstly, the narrowness with which the budget vote was won highlighted the thin parliamentary majority of the Samaras administration, although enough votes were garnered to pass the budget there will be a larger majority required next February to elect a President, on current numbers this is unlikely to be achieved which would prompt early elections leaving the door open for the resurgent anti austerity party, SYRIZA.

A second issue that shook markets last week was a signal from the government that they were exploring the option of an early exit from the country’s bail out program. Keen to see off the EU/IMF/ECB troika and bolstered by the successful bailout exits of Ireland and Portugal, Samaras has hinted that the Government will not draw down the last €12Bn from the bail out package, instead opting to raise the finance from the bond markets. Greece had a successful, if small, bond market auction recently, but markets have in a round about way hinted that they are not yet interested in post bail out Greek bonds, the 100 point spike in yields was a signal that this strategy may no longer be viable.

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