Latest MoF data show that general government cash deficit narrowed by 51.4% y-o-y to €9,656m in 11M’12 from €19,872m last year, with primary balance recording a surplus of €2,314m from deficit of €3,644m in 11M’11.

Current period data incorporate:

• A drop of state budget deficit by 45.9% y-o-y to €11,786m with primary deficit shrinking 94.4% to just €353m from €6,260m in 11M’11.

• Extrabudgetary funds’ (i.e. legal entities) surplus of €1,219m flat y-o-y.

• Local governments’ surplus of €195m almost 1/5 compared to last year’s surplus of €1,057m.

• Social security funds’ surplus of €716m from deficit of €348m in 11M’11.

Released data imply a slight deterioration of general government balance, which recorded a deficit of €273m in November compared to surplus in each of the past three months (Oct: €306m, Sep: €200m, Aug: €720m). On the contrary, primary balance remained marginally positive in November showing a surplus of €2m from €1,063m in October, a deficit of €191m in September and an exceptionally strong performance in August, when primary surplus stood at €1,669m. November bottom-line (deficit of €273m) reflects a negative contribution (i.e. deficit) from state budget (€600m) and – to a lesser extent – local governments (€106m) more than offsetting social security and extrabudgetary funds’ surpluses of €264m and €170m respectively.

It is also noteworthy that general government arrears (> 90 days), including tax refunds, rose by €2,307m or 32.7% y-t-d to €9,353m at the end of November. More importantly, arrears eased by €88m or 0.9% m-o-m for the first time so far in 2012. The bulk of general government arrears stems from social security funds (€4.4bn – 47% of total) and hospitals (€1.9bn – 20%), while local authorities’ arrears stand at €0.96bn (10.2%), state budget arrears at €0.90bn (9.6%), tax refunds at €0.79bn (8.4%) and other legal entities’ arrears at €0.39bn (4.1%).

We point out that cumulative surplus and primary surplus stood at €953m and €2,543m respectively over the August – November period, while arrears rose by €1,187m over the same period, implying an adjusted positive primary balance result (€1,356m) and slightly negative balance result (€234m) over the past four months.