BUSINESS

Budget beats the targets set for 2012

Containment of spending brought deficit lower than expected, despite shortfall in revenues By Prokopis Hatzinikolaou and Sotiris Nikas

The state budget appears to have beaten the targets set for 2012, according to preliminary figures released on Thursday by the Finance Ministry, even though revenues lagged both the target and the 2011 intake.

The budget deficit has come to 15.9 billion euros against a target for 16.3 billion, while the primary deficit undercut the target of 4.6 billion euros, ending up at just 3.7 billion. This was due to the dramatic decline in expenditure, the curtailing of the Public Investment Program and the considerable reduction in tax refunds.

Net revenues amounted to 51.7 billion euros in the January-December 2012 period, which was 4.1 percent lower than those in 2011, and 1.3 percent or 687 million euros below the target set for 2012. The shortfall is attributed to the reduced inflow from the European Union toward the Public Investment Program, which was 1 billion euros below target. Budget spending amounted to 67.6 billion euros, down from a target for 68.7 billion.

However, the optimism recorded over the last few weeks should not lead to the relaxing of efforts to streamline the economy, the Foundation for Economic and Industrial Research (IOBE) warned on Thursday, adding that an economic rebound can be expected by the first quarter of 2014.

In its quarterly report the foundation forecast that the contraction this year will end up at 4.6 percent, from 6.6 percent in 2012, but unemployment will climb to 27.3 percent from 24.5 percent last year.

IOBE believes that the rebound of the Greek economy cannot rely on consumption, especially with borrowed money. In this context, the main factor that it says will kick-start the rebound is investment in public works, through the direct inflow of funds from abroad, from the Greek private sector and via investment as a result of privatizations.

Nikos Zonzilos, a research associate at IOBE, said during the presentation of the report on Thursday that the problem of unemployment will be resolved but “it will take time.” IOBE believes it will take many years for the jobless rate to return to the 2008 level of below 9 percent.

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