ECONOMY

Revenues fall but deficit is on target

The budget deficit has risen from last year and revenues are trailing this year?s target, official figures show, while a report presented on Tuesday in Paris by the Organization for Economic Cooperation and Development sees the economy contracting by more than 5 percent in 2012.

Budget revenues were 500 million euros off target for the first four months of the year, according to official figures released by the Finance Ministry yesterday. This is attributed to a considerable drop in consumption and an increase in tax evasion.

In the January-April period social security funds absorbed more than half of their annual allocation, ministries only paid some of their dues to third parties, value-added tax revenues came in 800 million euros lower than in the same period last year, and the Public Investment Program was sacrificed at the expense of growth.

The budget deficit has risen by 24 percent year-on-year, or 1.77 billion euros, to reach 9.1 billion euros, although the target set was 11 billion.

The OECD?s 2012 Economic Outlook, which warned of a worse-than-anticipated recession for the eurozone, expects Greece?s economy to shrink by 5.3 percent this year, with a further 1.3 percent contraction in 2013, toward the end of which the first signs of a rebound will come.

This forecast is based on the assumption that Greece will continue to implement the reforms it has committed itself to in its bailout agreement with its official creditors. The OECD does warn, however, that should Athens fail to honor its commitments, the risk of a default will rise considerably, with unpredictable consequences.

Unemployment will reach up to 21.2 percent this year and 21.6 percent in 2013, the OECD report suggests, while the deficit will drop from 9.2 percent in 2011 to 7.4 percent this year and to 4.9 percent next year.