The return of twin deficits

As much as we want to close our eyes to feel optimistic that we will pass (successfully) this second wave of the pandemic, unfortunately the reality is that the coronavirus is leading the economy to a dead end. The same impasse we experienced 10 years ago, when the twin deficits – in the budget and the current account balance – got to the point where we could no longer service the public debt and find ourselves in the deepest recession in our post-war history. Central bank money is flowing in abundantly, the ECB intervention rates are negative, thus making even the most indebted bonds offering even a minimal return (below 1%) attractive, European fiscal constraints have been suspended… Somehow we are in the midst of a pandemic. But it would be a horse not to know or – even worse – to hide where we are. Because this time we may not be in danger of a “state bankruptcy”, but we are threatened by the bankruptcy of the real economy, that is, thousands of businesses and households that have lost ground. All signs are worrying. At the end of September the budget deficit exceeded 11.2 billion euros or 6.5% of GDP, the primary deficit 7 billion euros or 4% of GDP. And as expected, the The collapse of tourism led to a current account deficit of 7.9 billion euros at the end of August, 6.9 billion euros higher than in the same period in 2019. This combination and the large borrowing needs it caused are inevitably reflected. government debt, which exceeded 362 billion euros or 200% of GDP after successive issues of bonds and interest-bearing bills were used by the government to finance increased budget expenditures and measures to support the economy due to the pandemic Thus Greece became the second country after Japan that owes more than twice its GDP, with the difference that the Japanese public debt is domestic. This is the situation and whoever does not want to see it in full, of course and can not deal with it effectively. Follow it on Google News and be the first to know all the news See all the latest news from Greece and the world, at

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