The execution of the state budget has remained on track in the first four months of the year, but data released on Friday by the Finance Ministry caused some concern and leave no margin for relaxation.
From a primary surplus in the first quarter, the budget has slipped back to a primary deficit in the first four months, although it is within the targets set by the medium-term fiscal plan. The figures to end-April would have been far worse had the government paid out all the tax rebates due to companies and taxpayers and if the Public Investments Program had not had its expenditure cut dramatically.
The provisional figures issued on Friday showed a primary deficit of 330 million euros against a target for a primary deficit of 3.6 billion. Pretax revenues missed the target by 347.3 million euros, as they amounted to 14.26 billion euros. The ministry was supposed to return taxes of 869 million euros in the year to end-April, but has only paid out 325 million. However it has also returned 586 million euros in tax rebates from previous years.
April was in fact the first month during which both direct and indirect taxes attained their targets. Income tax beat the target by 40 million euros, or 7.1 percent, while property taxation fared 51 percent better, coming in 69 million euros above target. Value-added tax lagged by 5.1 percent, with most of the shortfall coming from VAT on fuel, but that was balanced out by the revenues from special consumption tax – particularly on tobacco – that bettered its target by 19 percent.
Revenues from the Public Investments Program in the first four months of the year beat the target by 655 million euros, while the program’s expenditure was contained to the tune of 914 million euros.
Total spending reached 18.16 billion euros, reduced by 2.5 billion euros from the target, and primary expenditure was reduced by 1.4 billion euros.
The question now is how the fiscal figures will shape up in the coming months. If income and property taxes are paid on time and if indirect taxes stay at April levels, revenues will make the budget target. Otherwise the country’s creditors are set to ask for more action as early as June.