Debt-Ravaged Greece Has a Budget Surplus After a Decade of Deficits

For the first time in recent memory, a month’s worth of economic news out of a debt crises-ravaged Europe wasn’t just positive—it was downright hopeful, especially in many of the countries hardest-hit by the eurozone crisis.

In Ireland, Citi raised its growth forecast for the country’s economy, consumer confidence jumped to the highest level in six-and-a-half years, and according to a survey by Deloitte, 96 percent of Irish CFOs said they think the economy has returned to growth or will do so this year. Portugal’s unemployment rate declined, while in Spain, unemployment rose, but at a slower rate than in previous years, suggesting the Spanish labor market might have hit the bottom.

Perhaps the most exciting news came out of Greece, a country wracked by the economic crisis, years-worth of unfunded liabilities and an economy that has been in a nosedive since 2008. Last month, Prime Minister Antonis Samaras prepared to announce that the country was projected to post its first primary surplus in more than a decade. According to the New York Times, the projected surplus was about 1 billion euros ($1.35 billion), while Bloomberg reported a slightly higher figure of over 1 billion euros ($1.4 billion). Never mind that Greece has more than 240 billion euros in bailout loans it still needs to pay back; a surplus, any surplus, had to be seen as a sign that the country could finally be beginning to repair the weak political systems and structural economic problems that drove the country into a hole in the first place.

Not quite. Before Samaras announced the projected surplus, Greece’s top administrative court ruled that some public sector wage cuts – part of a sweeping austerity plan meant to help shore up the country’s finances –were unconstitutional. Now the Greek government will likely have to repay police officers, firefighters and military personnel about 300 million euros in back pay.

Like previous reports that the Greek budget may be in the black, the announcement was of a primary surplus, which doesn’t take into account interest payments on the country’s massive debt. Austerity measures, while deeply unpopular in Greece, were necessary to secure a bailout from Europe’s wealthier countries, but they may have exacerbated the effects of an already painful recession.

In some ways, the future looks similar to the recent past: Germany is reportedly preparing a third rescue package worth 10 billion to 20 billion euros. Still, there are glimmers of actual hope. A survey released earlier this week showed that Germany, Europe’s largest economy, had the highest increase in manufacturing last month, and that Spain, Italy and Ireland all saw boosts as well. Greek manufacturers were reporting their first expansion since the summer of 2009. Small manufacturing rebounds and modest foreign investment won’t be enough to save Greece’s economy, but together they provide a welcome respite from a very long stretch of grim, depressing news.