Certainty on primary surplus target

The state budget’s primary surplus beat expectations by almost a billion euros in the first nine months of the year, General Accounting Office data confirmed on Tuesday, but tax revenues and social security funding figures are causing concern at the Finance Ministry.

By the end of last month the primary surplus had reached 2.53 billion euros, against a target for 1.55 billion. Moreover, this result has come with tax rebates amounting to 2.6 billion euros, or 304 million euros more than planned, Finance Ministry sources said. The primary surplus is mostly due to the 1.7-billion-euro reduction in expenditure from the revised target, to 39.5 billion euros.

The data indicated a shortfall of 574 million euros in the year to end-September, while the picture in terms of social security fund financing points to the fragile financial state of the pension system, with the fund of the self-employed (OAEE) having already spent 106.3 percent of its annual credit in the first nine months.

Nearly two-thirds of the tax revenue shortfall is due to delays in the commencement of payments of the new Single Property Tax (ENFIA). This is because the budget had provided for the payment of three installments by the end of September. Instead only one had been paid up to last month. Ministry officials expect ENFIA revenues to pick up over the rest of the year.

In contrast there was a 416-million-euro surplus in the collection of income tax. Indirect taxes also beat their target, by 7 million euros, even though the value-added tax on fuel fetched 6.1 percent or 100 million euros less than planned.

The data have boosted confidence at the ministry that the target for the 2014 primary surplus will be met. Officials expect revenues to come close to the target by the end of the year and point to the fact that just 45 percent of the money set aside for the financing of social security funds has been spent.

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