Putting off payments led to Q1 budget primary surplus

According to data released on Thursday by the Finance Ministry, the primary budget surplus beat its target for the first quarter of 2015 thanks to the postponement of state payments to third parties and increased revenues from the Public Investments Program. However, besides the problem with tax revenues, there is now a major issue with the freeze in payments to state suppliers, which is generating suffocating conditions in the real economy and the market.

The first-quarter primary budget surplus came to 1.7 billion euros, against a target for just 119 million. However this surplus was entirely due to the 1.5-billion-euro reduction in expenditure. According to sources, the state had spent just 43 million euros by the end of March on paying expired debts to its suppliers. Suppliers had received some 500 million euros from the state in the first quarter of 2014.

Alternate Finance Minister Dimitris Mardas admitted on Thursday that a significant chunk of payments has been postponed until future months. He added that he will conduct an inspection on expenditure and that if he finds any payments to be excessive they will not be made at all.

Apart from the freeze in payments to suppliers and the general containment of primary spending, budget data show that the Finance Ministry put a brake on the Public Investments Program in the first quarter: Its outgoings amounted to 542 million euros, missing their target by 178 million.

Net budget revenues may have beaten their Q1 target by 95 million euros and the March target by 1.1 billion, but the problem with tax revenues has not gone away. Sources say that tax revenues amounted to 9.3 billion euros in the first three months of the year, against a target for 10 billion.

The 700-million-euro shortfall is creating concern at the ministry, given that at the same time there has been a major increase in taxpayers’ debts to the state.

It was therefore the revenues of the Public Investments Program that saved the primary surplus, as they amounted to 1.4 billion euros against a target for 770 million.

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