ECONOMY

Jan.-Feb. spending balloons

Primary spending in the first two months of the year ballooned by 24.4 percent, the Finance Ministry said yesterday, highlighting the uphill battle for the government in its efforts to bring spending under control this year. Primary expenditure in the January-February period rose to 4.98 billion euros as a result of one-off payments and wage increases, the ministry said. Personnel costs made up a hefty 43 percent of the total; subsidies to pension funds and other organizations, 33 percent; funds allocated to municipal authorities, 13 percent, and agricultural subsidies and EU payments, 8 percent. The government is targeting primary expenditure growth of 6 percent for the full year. Critics, however, said the objective is not ambitious enough and that inelastic expenditures related to wages and pensions could drive up the general government deficit. Public sector employees are set to receive on average a 4.2 percent wage increase and pensioners a 4.5 percent boost in benefits this year at a total cost of 602 million euros to the government budget. The Finance Ministry recently announced a crackdown on public utilities expenditures, including requiring companies to submit balanced budgets and aim for profits. Auditors have been directed to review their wage bill, borrowing, hiring and advertising expenses. While expenditure in the January-February period spiraled upward, revenues managed to edge up by just 0.4 percent to 5.62 billion euros against an annual target of 5.1 percent. The figure, however, was distorted by a 469-million-euro windfall related to the euro changeover in 2002. Value-added taxes rose 15.3 percent to 2.25 billion euros, underlying the success of the ministry’s aggressive drive to get businesses to pay back taxes for unaudited years. FOO YUN CHEE