ECONOMY

Fiscal gap from revenues at 2.3 bln euros

With the state budget apparently already suffering revenue losses of more than 1 billion euros in the first month of the year, the new government will have to respond quickly to the major financial obligations concerning the coverage of cash and loan requirements and mainly the return of the tax administration – and taxpayers – to normality.

The main challenge for the next government will be the 2015 fiscal figures, which will be hard to arrive at given that the shortfall has increased since the elections were called and it will take a considerably longer time to cover revenues and expenditure than it had appeared at the end of 2014.

As things stand the negotiations between the new head of the Finance Ministry with the country’s European partners and the International Monetary Fund will be even more difficult now that the fiscal figures are worse than those seen by the country’s creditors last month. For instance, the 2014 primary surplus apparently came to 1.5 percent of gross domestic product, against 1.8 percent that the 2015 budget had factored in.

According to officials from the General Accounting Office, the lag in tax revenues compared to the targets set for January is greater than 1 billion euros. When this is added to 2014’s 1.3-billion-euro tax revenue shortfall, the fiscal gap in revenues amounts to 2.3 billion euros. The 2015 budget provided for a primary budget surplus of 3 percent of GDP.

All this points to a revision of the budget, as besides the revenue shortfall, the fulfillment of election promises such as the abolition of the single property tax (ENFIA) and the new tax brackets will have to be factored in. Therefore the new government will have to submit a new or supplementary budget to Parliament that will include the new estimates for 2015.