Primary surplus and revenues exceed target

By Prokopis Hatzinikolaou

Budget revenues in the first five months of the year are showing a rebound according to data released on Thursday by Alternate Finance Minister Christos Staikouras. Notably in May, an election month, revenues posted a significant recovery, exceeding the original targets.

Ministry figures showed that tax revenues in the year to end-May were 146 million euros above target, resulting in a primary budget surplus of 711 million euros for the first five months of 2014.

Staikouras said that the public finances are strengthening, paving the way for a gradual decline in tax rates. “The necessary foundations are being created for the recovery of the real economy and the promotion of employment, the distribution of a social dividend, a reduction in social security contributions and the gradual easing of the tax burdens on corporations and households,” he stated.

According to official data, tax rebates in the first five months amounted to 1.27 billion euros, compared with just 483 million in the same period last year. In May tax rebates were more than double those given out in the same month of 2013 as well as the target for last month. “Tax rebates were particularly high, much higher than in the same period last year,” the alternate minister stated.

Staikouras added that revenues before tax rebates were 250 million euros higher than those of May 2013, while tax revenues were 300 million higher on an annual basis and 285 million above target.

The figures presented are the revised ones, as the budget targets have been updated based on the targets of the midterm fiscal plan agreed with the country’s creditors. Originally the budget had provided for a primary surplus of 1.5 percent of gross domestic product, while the midterm plan’s revised target provided for a 2 percent primary surplus. The target for the first five months was for revenues to exceed expenditure by 208 million euros, but the actual figure came in at 711 million.

Net budget revenues amounted to 17.3 billion euros in the January-May period, beating the revised target by 62 million euros, or 0.4 percent. Total tax revenues came to 16.17 billion euros – 254 million euros or 1.6 percent above the revised target. Tax rebates reached 1.27 billion, some 85 million euros above target, and revenues from the Public Investments Program amounted to 2.3 billion euros, missing the revised target by just 16 million euros. Budget expenditure amounted to 21.59 billion euros, beating its target by 529 million euros.