Budget keeps exceeding targets

Primary surplus in the year to end-June amounted to 712 million euros, leaving scope for lightening of taxes By Sotiris Nikas

The state budget has ended the first half of the year with a primary surplus of 712 million euros, Alternate Finance Minister Christos Staikouras announced on Monday, generating optimism at the ministry that the target set for a primary surplus of 2.8 billion euros, or 1.5 percent of gross domestic product, for the whole of 2014 is attainable.

Such a major difference between revenues and expenditure, not including interest payments, could pave the way for a lightening of the tax burden on Greeks, although there remain some holes in the budget such as those resulting from court decisions challenging the legality of salary cuts to university employees, the police and the armed forces.

“For a third straight year the fiscal targets have been achieved,” said Staikouras. “This lays the necessary groundwork for the recovery of the real economy and the promotion of employment, for a reduction to social security contributions and the gradual slashing of the tax burden on corporations and households.”

Senior ministry officials argued yesterday that it is quite possible, if taxpayers meet the obligations amassed in the second half of the year, that the primary surplus may end up even higher by year-end, to edge closer to the target included in the midterm fiscal plan for 2015-2018 of 2.3 percent of GDP (4.2 billion euros).

While the original budget target for the year to end-June had been for a primary deficit of 635 million, the figures have shown a primary surplus of 712 million, i.e. over 1.3 billion euros better than expected.

Revenues before tax returns came to 166 million euros above target, while tax revenues beat their target by 211 million euros in the first six months of 2014. This was during a period when tax rebates amounted to 1.6 billion euros, against just 600 million euros last year.

A senior ministry official added that in the first 10 days of July the picture in revenues is also very positive, and definitely better in comparison with the same period in 2013.

Expenditure was contained by 943 million euros compared with the target, though spending on the Public Investments Program was 33 percent higher than in the first half of 2013.