Deficit beats
target, but at a price
Revenues were smaller than expected in the first half of the
year and spending has been slashed
Finance Ministry data for the first half of the year show that Greece’s
budget deficit and primary deficit figures continued to beat their targets,
although revenues remained in the red and payments to third parties all but
ground to a halt.
The state budget deficit for the January-June period stood at 12.31 billion
euros, against a target of 14.8 billion euros, while the primary deficit came in
at 3.1 billion euros, compared to a target of 5.26 billion, the official data
released on Tuesday showed. However these savings have come at the expense of
growth, as the failure to make payments to third parties means that the market
is being starved of cash just as it needs it most.
Net budget revenues in the year’s first half lagged the target by 987 million
euros as they amounted to 21.8 billion euros, with the target at about 22.8
billion. Last year revenues up to June 30 had totaled 22.03 billion euros.
The ministry noted in a statement yesterday that the revenue drop is due to
the postponement of the submission deadline for tax statements, which resulted
in a lag in income tax receipts (by 844 million euros). Transaction tax receipts
have missed the target by 530 million euros due to the drop in domestic demand,
while the collection of taxes from previous years also missed its target.
The deficit is smaller than expected due to the freeze on payments to third
parties, while June was one more month in which spending for the Public
Investment Program was considerably reduced. Tax returns to businesses were even
smaller than the target of 1.67 billion euros in H1, amounting to 1.57 billion
-- 1.2 billion euros less than last year.
Budget spending came to 35.6 billion euros in the year to June 30, which was
3.96 billion euros below the target set by the supplementary budget. Primary
spending came to 23.8 billion euros (the target was for 15.3 billion), with the
Public Investment Program being slashed by 1.6 billion euros in the first half
of the year compared with 2011.
Meanwhile the Bank of Greece announced on Tuesday that the central government
cash deficit fell to 6.5 billion euros in the first half of the year, compared
with 13.2 billion euros in the same period a year
earlier. |
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