ECONOMY

Pandemic derails the Greek budget

pandemic-derails-the-greek-budget

The coronavirus pandemic has blown a hole in the budget, to the tune of €9.36 billion for the first seven months of the year.

According to Treasury data released on Wednesday, the budget is showing a primary deficit (which excludes interest payments on the country’s debt) of €8.199 billion instead of a €1.16 billion surplus, as planned.

The €9.36 billion divergence from the target includes €3.5 billion less in tax revenue and €4.5 billion in extra spending to combat the pandemic, which included aid to enterprises and income support for individuals, as well as tax rebates.

“The July 2020 budget data show a divergence of 15% from tax revenue projections, which were made before the coronavirus,” said Alternate Finance Minister Theodoros Skylakakis. “This lag is lower than those of the previous two months – 16.9% in June and 35.5% in May – that were the result of the lockdown and suspension of tax payments,” he added.

July revenue was negatively affected by the decision to postpone the income filing deadline from July 29 to August 28, as well as the pandemic’s effect on tourism, Skylakakis said.

The minister added that the pandemic will seriously affect revenue from tourism and exports until at least October, and perhaps even November. In the meantime, however, there will be significant inflows from European Union programs, the temporary Support to mitigate Unemployment Risks in an Emergency (SURE) and the Structural Funds related to the pandemic, the dispensing of which should begin later this month.

According to still preliminary data, tax revenue in January-July 2020 was €22.678 billion – €3.57 billion or 13.6% lower than the budget target. Compared to the updated estimates submitted to the EU on April 30, it is €47 million higher.

The extra spending was on special compensation to health professionals (€1.118 billion), tax rebates for enterprises (€864 million), emergency aid to social security funds (€525 million) and extra funding from the public investment budget (€2.293 billion).