ECONOMY

Gov’t spending overshoots annual target massively

Primary spending in the first four months of the year overshot the annual target by more than threefold while revenues came to less than a third of what the government was aiming for, preliminary statistics released by the General Accounting Office yesterday showed. Ordinary budget primary spending in the January-April period rose 18.6 percent to 10.1 billion euros against a targeted annual increase of 6 percent. Regular expenditure rose 10.5 percent to 14.31 billion euros, sharply higher than the 5.2 percent goal set out in the budget. Greece’s tendency to overshoot spending targets came under the European Commission’s spotlight earlier this month. In its report on Greek public finances, Brussels said uncertainties over certain categories of expenditure could lead to spending exceeding the government’s goals. More importantly, higher-than-expected spending could slow Greece’s efforts to cut the debt-to-GDP ratio, already among the highest in the EU, it said. The jump in spending in the first four months came after the government was forced to pay family allowances to both spouses this year, which jacked up wage costs by 10.5 percent, far higher than the 3.9 percent annual target. Wage increases for the police and armed forces also weighed on the budget as did higher healthcare and pension fund outlays. A payment of 650 million euros was made to the three major pension funds, IKA, farmers fund OGA and the sailors’ fund NAT. The expenditure overrun is expected to ease in the coming months, the General Accounting Office said, citing the slower pace in the first four months compared with the first quarter when spending rose 25.2 percent. Ordinary budget revenues in the first four months undershot the 5.1 percent target, rising just 1.3 percent to 11 billion euros. Excluding the impact of one-off revenues from the introduction of euro coins last year, revenues would have gone up 5.9 percent. VAT revenues continued to outperform, increasing 16.4 percent against a full-year target of 6.4 percent. Robust consumer spending has proved to be a mainstay of Greece’s above-average growth in recent years. Investment budget expenditure rose 71 percent as Greece stepped up the pace of Olympic Games-related projects.