Revenue shortfall is set to grow this month

The halt in government payments to suppliers and state entities combined with the crumbling of public revenues make up an explosive mix that has a direct impact both on the markets and the negotiations with the country’s creditors. According to data released on Thursday by the State General Accounting Office, state expenditure contracted by 2.6 billion euros in the first five months of the year, as the state was unable to fulfill its obligations.

The statement published yesterday stressed that “the reduced level of state budget spending is mainly due to the adjustment of the cash planning based on the current restrictive liquidity conditions.”

At the same time, the net revenues of the budget posted a 964-million-euro shortfall, meaning that the payments halt created a primary surplus amounting to 1.5 billion euros, against a target for 556 million euros. In the January-May period last year the primary budget surplus had amounted to 707 million euros.

The net revenues of the budget came to 17.05 billion euros, down 5.4 percent from the target. This shortfall is attributed partly to the non-collection of the first tranche of corporate income tax, expected to amount to 555 million euros, as well as to the non-collection of eurozone central banks’ earnings from their Greek bond holdings, estimated at 132 million euros included in the May target.

The negative picture in revenues is seen continuing into June, given that most enterprises will not pay their tax dues before July 1. In case an extension is granted to the deadline for the submission of tax statements, things will get even worse, as regular taxpayers will also delay the payment of their first tax installment.

With only 11 full days left until the June 30 deadline for the online submission of income tax statements by corporations and taxpayers, no more than 1.45 million declarations have been filed, which means that over 4.5 million statements remain pending. It is therefore clear an extension will have to be granted, considering that the online system of the General Secretariat for Information Systems can only handle up to 150,000 statements per day. Accountants are expressing surprise at the high level of reluctance on the part of taxpayers to submit their tax declaration this year.

Reimbursements amounted to 1.1 billion euros in the year to end-May, lagging the target by 71 million euros, while the revenues of the Public Investments Program beat their target by 417 million euros, to climb to 1.57 billion euros.

State budget expenditure amounted to 20.02 billion euros, lagging its target by 2.6 billion. The spending of the Public Investments Program amounted to 971 million euros, missing its target by 689 million, while trailing last year’s revenues by 809 million euros.