ECONOMY

Targets missed because of revenue slowdown

Confirming the government’s fears that this year’s revenues are likely to fall short of ambitious targets, the Finance Ministry said yesterday that the yield in October grew by just 5.6 percent from the same month last year, while over the January-October period the increase amounted to 8.3 percent. The figures compared with 5.42 percent revenue growth in September and an 8.58-percent rise in the nine-month period to September, which marked a slowdown from the previous month and period. Revenues in August grew by 8.88 percent while in the eight-month period to August, the increase was 9 percent. Earlier in the week, Deputy Finance Minister Giorgos Floridis said the September 11 attacks in the US are likely to impact on the Greek economy and by default the state coffers. He warned that revenues for this year would probably diverge somewhat from expectations. Faced with such concerns, the government on Thursday revised downward the projected fiscal surplus to 0.1 percent of gross domestic product (GDP) from the previous target of 0.5 percent. With global uncertainty likely to carry over to next year, the budget surplus for 2002 has also been downgraded to 0.8 percent of GDP from 1.3 percent. Thursday’s announcement of corporate and individual tax cuts and incentives that will deprive the state of 230 billion drachmas next year will likely further complicate government attempts to improve the budgetary yield. The reimposition of a tax on repos, this time at 7 percent, is expected to bring in only 35 billion drachmas. Revenue growth in the 10 months to October resulted in a 30-billion-drachma surplus, the Finance Ministry said, down from a 54-billion-drachma gain in the previous period. October however showed a 24 billion shortfall, with revenues up by just 885 billion drachmas. The tax yield last month rose by 2.0 percent while over the 10-month period, the levies increased by 6.7 percent. Custom revenues in October and in the 10 months to October were up by 7.8 percent and 4.0 percent respectively. Value-added taxes soared by 10.7 percent in October and by 10.6 percent in the 10-month period. The biggest percentage gains were in dividends paid by state-controlled enterprises, increasing by 38.3 percent last month and by 42.4 percent over 10 months. Many victims cross the first frontier using valid passports, only to be stripped of their papers and sold on once abroad. Citizens of most aspiring EU member states need no visa to visit Western Europe, making trade outside the region tough to detect.