Budget hole appears to be widening

Eurozone experts are now raising Greece’s expected fiscal gap for 2015 to 4 or 5 billion euros. Alternate Finance Minister Nadia Valavani’s dramatic call on Tuesday for people to pay their taxes highlights the problem of the revenue shortfall since the start of the year, which is increasing the hole already seen in the budget.

Greece’s creditors had estimated that there would be a 3-billion-euro gap in the budget if the primary budget surplus reached 3 percent of gross domestic product this year. With the measures proposed by the previous government the gap would shrink to 1.7 billion euros, but now that the new government has stated it will not implement them the estimate reverts to 3 billion euros.

Add to this the conservative estimates for a 1-billion-euro shortfall in revenues and you have a 4-billion-euro gap from the start of the 2015 fiscal year. Eurozone officials believe that even if the revenues slowdown is corrected, the fiscal gap would grow to 5 billion euros if the government implements its promises made before and after the election.

Alternate Finance Minister Dimitris Mardas said on Wednesday that the General Accounting Office has asked all ministries to send details of the measures they intend to implement so that it can assess their cost. He added that most ministries have already done so and the cost “is not skyrocketing,” while noting that the policy to be emerge will stretch across the government’s four-year mandate, meaning that the cost will be spread across four budgets and not just this year’s.

Mardas also stressed that the government’s fiscal policy and the measures finally implemented will depend on the agreement that the government reaches with its eurozone peers regarding the change of targets, such as the drop in the expected primary surplus from 3 to 1.5 percent. Athens will in any case make changes to the 2015 budget that will either be reflected in a supplementary budget or in the adjustment of the midterm fiscal plan.