ECONOMY

Q1 spending soars 25 pct

Primary spending soared up by 25.2 percent in the first three months of the year as a result of a higher wage bill and increased healthcare spending, even as revenues rose at a snail’s pace, the Finance Ministry announced on Wednesday. This development could jeopardize Greece’s hopes of reducing its budget deficit to 0.9 percent of GDP this year. The ministry said the hike in primary spending was «fortuitous and was due to the increased spending on wages for central administration employees and healthcare subsidies» among other things. Spending in these sectors is expected to ease in the coming months, it forecast. The Organization for Economic Cooperation and Development last month urged Greece to rein in primary government expenditures as part of a debt-reduction strategy. The recommendation echoed a similar proposal by the Bank of Greece in its annual report released a few days earlier. International credit rating agencies have warned that Greece could remain one of the lowest-rated countries in the eurozone unless it takes drastic action to cut its high level of debt. The government is targeting a 6 percent increase in expenditures this year. Overshooting the target could pose a serious setback to Greece’s goal of a 0.9 percent budget deficit this year and even possibly push it up to 1.6 percent, Alpha Bank warned in a research note last month. Public investment spending was up by 171.6 percent, while interest expenditures fell 11.9 percent. Revenues rose by 2.3 percent to 7.99 billion euros in the first quarter against a targeted annual increase of 4.9 percent. Excluding a one-off gain of 469 million euros in February 2002 due to the introduction of the euro, revenues would have gone up by 8.8 percent, the ministry said.