Just a few days after the passing of the implementation law, budget figures for the month of June show a new gap of up to 4.5 billion euros, up from 3.2 billion in the year to May, while the central government deficit widened 28 percent in the first half of 2011, according to preliminary data released on Monday by the Finance Ministry.
The 3.2-billion-euro gap in this year?s budget was the level on which the midterm fiscal plan was based, which creates serious doubts as to the execution of the budget this year without taking yet more measures in the fall.
Both revenue and spending missed the targets set out in the 2011 budget plan, with the government deficit increasing to 12.8 billion euros from 10 billion a year earlier.
Net revenue decreased 8.3 percent to 21.81 billion euros, missing the budget plan?s goal by 3.27 billion euros. The ministry blamed the drop on a deeper-than-forecast recession that hit revenue and an increase in rebates to people who paid too much tax in 2010.
This means that the ministry will have a mammoth task ahead of it in trying to bring in 33.7 billion euros in the second half of the year, that is about 5.6 billion euros per month. This target is particularly difficult given that some of the new measures taken may not bear fruit this year owing to the crisis in the market.
The ministry is putting on a brave face, however, suggesting that ?the current lag in revenues is expected to be handled in the year?s second half via the impact of the tax measures included in the implementation law of the 2011-15 Midterm Fiscal Strategy Program.?
Ordinary spending increased 8.8 percent between January and June to 33.2 billion euros, compared with a budget target of 31.9 billion, the ministry said. This is attributed to the increase in grants to social security funds to offset the reduction in contributions and the increase in unemployment benefits granted.
Public Investment Program spending showed a 42.3 decrease, or a drop of 1.56 billion euros.
One of the reasons that the ministry has decided to proceed to the settlement of small debts by taxpayers is due to the opening of the gap in the budget – a quick way to cash in some revenues. The measure is likely to be announced in the coming days.