Unbridled domestic borrowing

State borrowing from domestic sources exceeded the projected level for the entire year as early as the first quarter, by 40 percent or 31.8 billion euros. This reflects the complete derailment of the state budget and the state’s lack of liquidity as it scrambles to pay its debts inside and outside the country.

The data on the execution of the state budget are revealing, as they show that tax revenues slumped 748 million euros in the first quarter of 2015, while in terms of expenditure the state has simply ceased making payments, lagging projections by 1.5 billion euros.

In the year to the end of March the state has proceeded to short-term borrowing (repos) from general government entities amounting to 111.8 billion euros, while the budget had provided for no more than 80 billion euros for the entire year.

The lack of liquidity, owing to the non-payment of the last bailout installment and the country’s inability to access the markets, would have led any government to domestic borrowing through repos. That is why the budget had provided for repos of 80 billion euros, which does not amount to net borrowing of 80 billion euros but rather to repeated 15-day loan rollovers.

Besides the lack of cash, the state has been trying to cope with the major shortfall in direct tax revenues: In the first quarter they amounted to 3.9 billion euros, lagging the target by 515 million euros or 11.7 percent. The income tax revenues from taxpayers fetched 167 million euros less in the year to end-March, direct taxes from previous years brought in 355 million euros less, while indirect tax revenues fell short by 233 million euros, reaching 5.4 billion euros.

Primary expenditure was contained by 1.1 billion euros.

Notably, spending for the coverage of hospitals’ deficits and the payment of their old debts amounted to just 43 million euros in Q1, against 500 million euros in the same period last year. The annual target for the entire year is 1.1 billion euros.

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