The General Government Debt remained broadly stable at €18.56 bn at the end
Average short term debt yields have continued to drop in June and July with short term rates falling at 4.22% in the end of July from 4.48% at the end of Q1 2014.
Long term bond yields exhibited relative stability during the period of June-July remaining around the 5% mark despite the number of negative news regarding the external environment faced by the Republic and the continuing crises in
The 5th Programme tranche was disbursed in
According to the report on fiscal developments, developments in public finances continue to exceed expectations.
General government budget balance (GGBB) was in deficit during the first half of 2014, of the order of €22 mln (-0.1% of GDP) compared to a forecast deficit of -€145 mln (-0.9% of GDP). General government primary balance (GGPB) was in surplus during the first half of 2014, of the order of €171 mln (1.1% of GDP) compared to target surplus of €46 mln (0.3% of GDP).
Total revenue reached €3,180 mln during the first half of 2014, in line with the forecast. Total expenditure reached €3,202 mln during the first half of 2014, exhibiting a decline of €124 mln vis-À-vis the forecast.
In accordance with the macroeconomic scenario agreed during the 5th review, the budget balance is estimated to exhibit an improvement with the deficit falling to 4.7% of GDP in 2014 compared to a deficit of 5.4% the year before.
On public debt and financing, the report notes that the
On the 1st of July the Republic proceeded to a partial early repayment of the bank recapitalization bond held by the
DBRS upgraded the
Regarding the macroeconomic Environment, in the 1st quarter of 2014, GDP (in seasonally adjusted terms) contracted by -4.1% compared with -4.9% in the 4th quarter of 2013 on an annual basis.
The contraction was mainly due to the subdued performance of the secondary sector (construction, manufacturing) and the financial sector. From the expenditure side, the contraction was more pronounced in investments of construction, while net exports made a positive contribution.
The business operating environment remains constrained, given that lending to non-financial corporations is subdued and interest rates are still relative to economic conditions high.
Public Debt Management Office expresses the view that that growth in 2014 will remain negative, around 3½-4%, and "we assume a rebound in 2015 with a gradual restoration of lending at affordable rates".
Exports of goods decreased by 7.1% in January-
Inflation as measured by the HICP, stood at 0% in
The most affected segment of the population is youth. Particularly worrying is also the rapid increase in long-term unemployed.
Compensation per employee in the 1st quarter of 2014 declined by around 4.5% compared to the 1st quarter of 2013, contributing to a decline of nominal unit labour costs and improving cost competitiveness further. The observed wage adjustment is expected to help containing the upward pressure on unemployment, the report concludes.
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