ECONOMY

State arrears mount up, revenues fall short, budget figures show

state-arrears-mount-up-revenues-fall-short-budget-figures-show

A primary budget surplus of 3.5 billion euros was recorded in Greece’s state budget for the first seven months of the year compared to a target of a 3-billion-euro surplus.

The savings came as a result of drastic cutbacks by the cash-strapped government in the months before a deal was reached with its creditors and the capital controls imposed in late June to keep the country’s banking system from collapsing.

The non-payment of 4.4 billion euros in state dues to third parties was also recorded in the same period, contributing in part to the savings.

Total state budget revenues for the first seven months of 2015 came to 26.7 billion euros compared to a target of 30.8 billion euros, a shortfall of 4.1 billion euros.

In total, the state budget was 40 percent short of its expected target for the month of July. The budget deficit has led the government and its lenders to change the already revised growth target for 2015 to reflect a primary deficit of 0.25 percent of GDP instead of a 1 percent primary surplus target, which had also been revised down from the 3 percent surplus target initially demanded by Greece’s lenders for 2015.

According to the Ministry of Finance, the discrepancy in the January-July 2015 budget can be attributed to the extension of the deadline for personal income tax declarations (and payment of the first installment) along with that for legal entities’ income tax declarations and payment.

Additionally, the non-confirmation and non-payment of the first installment of the 2015 ENFIA property tax contributed to the deficit, as well as the fact that Greece did not receive 1.7 billion euros in profits from Greek bonds held by Eurosystem central banks.

Greece and its international lenders have negotiated lower fiscal targets as part of the country’s new bailout agreement, reflecting the fact that the underlying economic conditions have deteriorated since last year, which put the goals agreed by the government led by Antonis Samaras beyond the reach of the current coalition.

The targets, tweaked from an earlier baseline scenario, foresee a 0.25 percent of gross domestic product primary budget deficit this year, turning into a 0.5 percent surplus from 2016, 1.75 percent in 2017 and a 3.5 percent surplus in 2018.