May revenues in deep slump
The good news of a relatively small decline in state revenues, reflected on the budget data for March and April, was dampened last month by a slump of 33.5% compared to the budget target.
After lagging budget targets by 7% in March and 17.2% in April, state revenues missed their May target by €1.143 billion and even the revised target submitted in April with the Stability Program by €219 million, provisional budget data published on Monday showed.
A Finance Ministry source added on Monday that the target for the primary budget balance has also been revised for this year already: Instead of a primary deficit of 1.9% of gross domestic product as provided for in the Stability Program (and the original 3.5% primary surplus target of the 2020 budget), the forecast is for a primary deficit of more than 3% after the latest government measures that have been announced.
The deterioration in May is to an extent the flipside of a rather good April, as many professionals rushed to pay the value-added tax for March in a lump sum (instead of two tranches) in April to secure the 25% discount. In this sense, May’s figures are not necessarily a deviation from the targets for the following months too.
“We had a considerable reduction in revenues in May that were hurt simultaneously by the economic lockdown in April, the suspension of tax obligations for a very large section of the economy and the prepayment in end-April of the VAT due in May. The latter explains the discrepancy in relation to the revenue projection included in the Stability Program,” said Deputy Finance Minister Thodoros Skylakakis, commenting on the data.
However, the first few days of June have already given worrying signs, as the lack of tourists is being reflected on revenues, while the actual impact of the lockdown continues to emerge day by day, the same ministry source told Kathimerini.
He added that a 60% reduction in this summer’s tourism (which is not the worst-case scenario) translates into an annual GDP contraction of 3.5% for the season.