Budget deficit down in H1
Budget figures for the first half of 2005 are giving ministers cause for worry, despite a trimming of the deficit year-on-year. According to data released by the General Accounting Office yesterday, public revenues were up 3.6 percent in the period in question, against an annual target of 11 percent, while expenses, initially thought to be under control, were running at a clip of 6.7 percent compared to a budget target of 4.8 percent. The rise in primary expenses (mainly public servants’ payroll and grants) was restricted to 3.5 percent. In the first half of 2004, total expenses had gone up 12.7 percent and primary expenses 16.7 percent. Although the Finance Ministry noted in a statement that the public deficit was down 11 percent compared to the first half of 2004, this still amounted to 7.66 billion euros, when the budgeted total for the whole of this year is 8.5 billion. According to a number of analysts, the reduction in the deficit is chiefly explained by a sharp drop in the absorption of funds under the Public Investment Program, which amounted to 2.06 billion euros. Public debt interest payments rose by 14.6 percent, year-on-year, against a target of 2.9 percent, which the ministry said was due to a 2001-dated debt swap payment that was activated last April. Sources said the swap deal had been concluded by the previous PASOK government under particularly unfavorable terms, apparently in its anxiety to avoid breaching the European Union’s mandatory ceiling of public debt as 3 percent of gross national product. The present New Democracy government’s revision of public accounting rules ultimately led Eurostat to determine that Greece broke this ceiling every year since 1997. Public investment Environment and Public Works Minister Giorgos Siouflias said in a statement that the drop in disbursements for the Public Investment Program was expected, since in the first half of 2004 a spate of Olympic projects was under way. It is also explained by the number of projects auctioned after April 2003, entangled in long legal battles until January 2005 over a controversial bidding method then in force. He added that the government has done away with this problematic method and has since auctioned further projects budgeted at a total of 5 billion euros. Seven more large projects are in the process of being assigned under public-private partnerships and concession schemes, Souflias said. «The absorption rate of funds under a public investment program is judged after the end of the year, given that according to statistical data, about 50 percent of absorptions takes place in the fall,» he said.
