ECONOMY

Seven-month deficit below target

The Finance Ministry on Wednesday presented better-than-targeted state budget deficit figures for the first seven months of the year, mainly thanks to slashed public spending.

The deficit was 13.2 billion euros, compared to a target of 14.8 billion, according to a statement. The primary deficit came to 3 billion euros, against a targeted 4.5 billion. The annual target is 1 billion euros, as the ministry expects the main bulk of income tax to be paid in the second half of the year.

Net public revenues fell 2.8 billion euros short of the target in the January-July 2012 period. The income tax shortfall is around 1.4 billion euros, but most of this is expected to be remedied by year-end. Property taxes produced 750 million more than expected and the road tax 135 million euros above target. The biggest problem regarding revenues appears to be the slack in VAT collection (600 million short of target). Revenues from the public investment program were also 560 million short.

In order to offset the shortfall and keep the deficit under control, the Finance Ministry remained tight-fisted, spending 4.4 billion euros less than planned, of which 1.9 billion was in primary expenses, 207 million in arms programs and 160 million less in interest payments.

The most serious threat to the budget at the moment is posed by the financial requirements of social security funds, which in the January-July period used up 74.2 percent of their 2012 allocation.

Alternate Finance Minister Christos Staikouras has sent letters to his colleagues, urging them to ?push all margins? in limiting spending, particularly as regards grants to NGOs and contributions to international organizations, in view of the drafting of the 2013 budget. At the same time, senior Finance Ministry officials called on the ministries of Defense and Public Order to identify precisely the cuts that have to be presented to the troika as alternatives to reduing the pay of security forces personnel.

A senior official said that the 12 percent cut in the pay of particular categories of civil servants including academics, judges and doctors will apply retroactively from July 1.