Primary surplus offers glimmer of hope

The state budget showed a net primary surplus of 1.4 billion euros in the first eight months of the year, creating optimism at the Finance Ministry for the attainment of the target for a primary surplus on an annual basis. The problem with revenues is proving more stubborn as they continue to lag by 1 billion euros, although the course of indirect taxes is encouraging as at end-August they had beaten the budget’s target by 328 million euros.

The achievement of a primary surplus “will allow for the exercising of our economic policy with a degree of liberty,” Alternate Finance Minister Christos Staikouras stated on Tuesday while announcing the latest budget execution figures. He added that the conditions are gradually being formed “for tackling the issue of the public debt.”

The data showed that in the first eight months of 2013 the budget had a primary surplus of over 2.9 billion euros, but this figure also includes the return of the profits of fellow eurozone central banks which they had reaped from their Greek bonds. That amount was not included in the 2013 budget and will not be calculated in the formation of the budget’s result. This means that 1.5 billion euros will be subtracted from the primary surplus the country’s creditors take into account.

There are, however, certain factors that threaten the primary surplus for the rest of the year. The first concerns citizens’ capacity to keep paying their taxes, as by the end of the year they will have to pay income tax, property taxes and road tax for vehicles.

Crucially, this surplus of 1.4 billion euros depends on the considerable containment in the expenditure of the Public Investment Program by 1.3 billion euros. Still, the Finance Ministry wants the program to operate faster as that would secure the quickest possible absorption of the program’s revenues.

The ministry is also delaying tax rebates to taxpayers to a significant extent, as displayed in the fact that in the year to end-August the state had failed to return 683 million euros of a total of 1.8 billion euros calculated.

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