Greece Budget Beats Target to Report Surprise Primary Surplus

Austerity-stricken Greece comfortably beat its fiscal budget target in the year to July and even reported a primary surplus, according to figures from the finance ministry.

Before interest payments on debt, the Greek state budget had a surplus of €2.6bn ($3.5bn, £2.2bn), compared to a deficit of €3.14bn in the corresponding period a year before.

The budget, which has been aided by rescue funds from eurozone governments, the European Central Bank (ECB) and the International Monetary Fund (IMF), is also not inclusive of local authorities' finances and social security fund budgets.

"[This data] makes the achievement of a primary budget surplus at the end of the year for the general government all the more feasible," Deputy Finance Minister Christos Staikouras said in a statement.

Athens received more subsidies from the European Union than expected and spent far less on investment projects than planned, lifting Greece into a budget surplus despite its deep six-year long recession. GDP figures for the second quarter show another contraction, registering a 4.6% decline on the same period a year before.

Government statistics report €1.5bn in one-off revenue coming from the ECB. The central bank had earned profit on Greek government bonds purchased at the height of the crisis, which it returned under the terms of the country's bailout.

Spending dropped to €32.7bn in the first seven months of the year, from €40.8bn. Revenues grew 11.4% year-on-year to €30.8bn.

Despite the improvement, the Greek economy continues to struggle under the enormous pressure of billions of euros of public spending cuts. Its economy has shrunk by almost a quarter as taxes are hiked, the public sector stripped back to the bone and welfare payments cut.

In May Greece recorded its highest ever rate of unemployment, with 27.6% of the workforce jobless. Youth unemployment is even higher, with 64.9% of 15-24 year olds out of work.