MoF final data (on a modified cash basis) on Greek budget execution (released on December 24) depicted a softer performance in November compared to that of the previous month, yet all key budget items continued to outperform targets.
Revenues (excl. tax refunds) resumed a negative trend in November retreating by 7.6% y-o-y, after a 14.3% increase in October and a 24.5% drop in September. As a result, 11-month figure eased 4.0% y-o-y (10M’12: -3.7%) to €45.9bn, slightly outperforming 11-month target by €0.37bn or 0.8%. According to MoF, better-than-expected revenues are attributed to increased income taxes, other taxes incl. solidarity levy, property taxes, non-tax revenues and insurance taxes.
Primary expenditure continued heading south for tenth month in a row, at an accelerating pace, slipping by 18.3% in November, following a drop of 4.6% in October and 5.3% in September, bringing the 11-month figure down 9.5% y-o-y to €42.0bn, 1.1% better than target. The cut in primary expenses is mainly due to a 6.9% y-o-y reduction in salaries & pensions to €18.4bn as well as a drop in grants to social security sector by 8.4% y-o-y to €15.2bn.
Interest payments dropped to €11.4bn down 26.4% y-o-y (FY’12 target: -28.2%), in line with the 11-month target. It is reminded that almost half of 11M’12 interest payments (€6,083m) was recorded in March and was related to the implementation of the PSI agreement.
Overall, 11-month budget deficit narrowed by 40.2% y-o-y (the second highest drop so far in 2012) to €12.85bn from €21.5bn last year, with November recording a deficit of €0.59bn from surplus of €0.46bn in October and deficit of €0.24bn in September. It is noteworthy that bottom-line was supported by the significant positive contribution of PIB (Public Investment Budget), which exhibited a deficit of €0.67bn in 11M’12 from €1.64bn last year. Furthermore, 11-month reported figure bettered 11-month target by €2.2bn or 14.6%, still providing a safety cushion for the last month of the year.
Primary balance turned negative in November recording a deficit of €0.28bn from surplus of €0.93bn in October and deficit of €0.66bn in September. Furthermore, 11-month primary deficit stood at €1.42bn, down 76.2% y-o-y, significantly beating 11-month target by €2.17bn or 60.5%. It is also noteworthy that following 11M fiscal performance, Alternate FinMin Christos Staikouras stated that 2012 budget primary deficit will beat FY target of €4.58bn.
Independent Insight Views 
I think what Greece has achieved on the budget and current account balances is really impressive. This, however, is my conclusion: the current structure of the Greek economy is such that when budget and current account reach equilibrium, the economy cannot employ its people. It is funds flow from abroad which had become the principal driver behind adequate Greek employment, at least since the Euro. That funds flow is unlikely to restart in necessary volumes in the form of debt going forward. Thus, I offer three solutions for the Greek problem: foreign investment, foreign investment and, again, foreign investment. Not only with a view towards bringing funds into the country but, above all, with a view towards bringing know-how in all areas, particularly in the area of corporate governance, into the country!