Primary surplus offers cushion to budget
The dramatic shrinking of expenditures and the positive course of revenues have led to the creation of a cushion for the state budget in the first half of the year, which showed a primary surplus of 2.47 billion euros against a target for a primary deficit of 1 billion. However, the course of the Public Investments Program is causing some concern as in end-June state spending on investment came to just 1.3 billion euros against an annual target of 6.75 billion.
The cushion of around 3.5 billion euros over what the budget had provided for is due to the reduction of expenditures by 3.35 billion euros. At the same time, the net revenues of the state budget beat their target by 146 million euros, as the main value-added tax rate was increased from 23 to 24 percent in June.
This was offset to a great extent by a reduction in the revenues of the Public Investments Program, which came to just over 2 billion against a target for 2.67 billion euros, lagging by 642 million.
The program’s spending should have come to 2.1 billion euros in the January-June period but it missed this target by 883 million due to excessive containment. This mainly came from projects funded jointly with the European Union, in which the state has invested 1 billion instead of 2 billion euros. The Finance Ministry expects this anomaly to be ironed out in the second half of the year, so that the annual target of 6.75 billion euros can be achieved – though this currently appears to be a long shot.
