ECONOMY

Bad start to the year for state finances

State finances collapsed in the first two months of the year, creating a fiscal black hole reaching 1.15 billion euros.

According to figures released by the Finance Ministry on Friday, revenues have fallen short while expenditure has overshot the mark, forcing the government to look into adopting further measures to save this year?s budget.

Revenues in the January-February period were 865 million euros off the target set by the Finance Ministry.

In comparison with the same period a year earlier, revenues were 9.2 percent lower, with the ministry blaming the differences on last year?s boost in road tax which was not repeated, fewer contributions from a one-off tax imposed on companies and less revenues from salary earners.

What is unusual is that the ministry had not set lower targets due to the anticipated revenue drop connected to these three reasons.

Obviously some poor estimates were made while other revenue streams failed to perform.

For example, income from stamping out tax evasion was limited as fewer audits were carried out while the collection of tax hikes imposed on property owners has been pushed back to 2012.

The negative developments on the revenue front have prompted staff changes at the ministry. Senior tax officials are expected to be shuffled around or even transferred to other Finance Ministry departments.

Meanwhile, expenses were 283 million euros higher than the target set for the first two months of the year.

The total figure reached 9.32 billion euros, versus 9.04 billion in the same period in 2010.

In an attempt to explain the difference, ministry sources said that the extra amount is due to a 351-million-euro payment of hospital bills. However, this payment had been included in the budget and was not unexpected.

The above amounts are related to the state budget and not all fiscal data that form the general government deficit, the indicator that determines how well Greece?s fiscal reforms process is going.