The primary budget deficit in the first eight months of 2020 came to 6.6 billion euros, while Finance Ministry sources are putting it at €10 billion or 6% of gross domestic product for the entire year.
The data published on Wednesday by the ministry showed a considerable improvement in August, when tax revenues were €400 million higher than the revised – due to the pandemic – target of the budget and only €11 million below the monthly target of the original budget.
However, that does not change the overall course of fiscal deviation, and a senior source at the ministry noted on Wednesday that the government will now proceed based on the adverse scenario of the Stability Program that provides for an 8% contraction and a 6% primary deficit for the entire year. That would take GDP to around €172 billion and the primary deficit to €10 billion.
The same official argued that the 2021 budget will seek a fiscal balance while as of 2022 the target will be to return to primary surpluses. The resources from the Next Generation EU fund will help in this direction, he added, as they will boost growth. He went on to calculate that in the first few years the takings from the European fund will amount to some €5-6 billion per annum.
The original budget target for the January-August period had been for €1.1 billion, so the shortfall between the target and the result comes to €7.7 billion. The comparatively better performance of revenues in August is attributed to the extension of the tax declaration deadline.
“August tax revenues were better than expected,” Alternate Finance Minister Thodoris Skylakakis stated. “They came roughly to the level of the original forecasts in the 2020 budget and were €400 million above the adjusted monthly estimates in the Stability Program” Athens sent to Brussels in spring.
“This obviously reflects the maintenance of the payment culture by individuals and corporations and the increased liquidity in the economy via the multiple government measures,” said Skylakakis.