Greece says higher tax revenues show it is on track to meet bailout targets

Greek tax revenues exceeded expectations in October, helping the country stay on track to meet its 2013 fiscal target, the government said on Wednesday.

In what may strengthen Athens’ hand in protracted bailout negotiations with its international lenders, the central government posted a primary budget surplus – before interest payments and one-off revenues – of 1.1 billion euros.

Deputy Finance Minister Christos Staikouras told reporters tax revenue in the period was 250 million euros ahead of target, showing that households and business are coping with record unemployment and a wave of corporate bankruptcies in the sixth year of an austerity-fuelled recession.

This means that Athens was on course to hit its 2013 fiscal targets and fulfill conditions to seek additional debt relief from its international lenders, Staikouras said.

“At a huge sacrifice to Greek citizens, unprecedented in post-war Europe, it seems that the country is succeeding its goal,» Staikouras said.

A 345-million euro primary surplus target at general government level, which also includes the budgets of social security administrations and local government, was «feasible», Staikouras said.

Greece has a long history of questionable reporting of data, but it is now under close scrutiny from its lenders, the so-called troika of the International Monetary Fund, European Commission and European Central Bank.

Wednesday’s reading may help Athens in negotiations with the troika, which questions its promise that it will hit its 2014 targets without resort to new, unpopular savings.

“The country strengthens its negotiating position,» Staikouras said.

Under the terms of its bailout, Greece’s primary budget must be balanced this year and have a surplus of 2.751 billion euros, or 1.5 percent of GDP, in 2014.

But lenders believe that Athens will miss the 2014 target by about 2 billion euros, due to social spending overruns and possible tax revenue shortfalls.

Athens disagrees, saying that expected economic recovery and better tax collection will help it hit its targets.

The government has also been spending far less on public investment than it initially planned to fix its finances this year. Public investment spending was 3.32 billion euros in Jan-Oct, about 1.6 billion euros less than targeted for the period.

The protracted negotiations could drag on into next year, delaying further loans to Athens, a senior euro zone official said late on Tuesday.

Greece is due to receive up to 5.9 billion euros of EU/IMF lifeline loans by the end of the year, according to a current disbursement schedule.

The two sides are not in a hurry to conclude a deal since the country has no pressing funding needs.

About 1.85 billion euros of bonds are falling due on January 11, according to ThomsonReuters Eikon data. Its next big bonds, worth about 9.3 billion euros, mature in the second half of May.


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