Data on state revenue from the first seven months of the year show that the 2005 budget goal will be impossible to attain. In the January-July period, revenue increased 3.7 percent relative to the same period last year. The budget target for the whole year was an 11.4 percent increase. Expenditure is also off target: While primary expenditure has only increased 2.5 percent year-on-year (versus a 4.9 percent target), a big rise in borrowing and, consequently, a rise in interest payments on debt, pushed overall expenditure 6 percent higher in the first seven months of 2005, as against a full-year target of 4.6 percent. Even the small rise in primary expenditure is the result of significantly lower outlays for the Public Investment Program (PIP). While this helps keep spending lower, it also depresses economic growth. The government has also failed to pay the total sum owed to construction companies for infrastructure projects related to the Athens Olympics. Overall, PIP outlays have declined 40.8 percent this year, to 2.89 billion euros, from 4.88 billion in January-July 2004. This is also an indication of reduced EU fund inflows through the Third Community Support Framework (CSFIII) program. Spending on debt interest payments has risen 16 percent; the 2005 budget target is for a 3 percent rise. Economy and Finance Ministry officials insisted yesterday that the previous Socialist government, which lost power about 18 months ago, is to blame for this year’s rise in borrowing. They claimed a 450-million-euro debt swap deal on unfavorable terms is the cause behind a great part of the borrowing problem, along with the fact that most debt interest payments take place in the first half of the year. It is also true, however, that most expenditure occurs in the second half. The main opposition Panhellenic Socialist Movement (PASOK) reacted to the ministry’s explanations. «Mr Alogoskoufis [the economy and finance minister] misinforms the Greek people by distorting reality. The truth is that there is a very significant underperformance in revenue, while expenditure is also off target, despite the fact that the PIP has been cut by 41 percent, payments for finished infrastructure projects and for critical sectors such as health and education have been suspended. The budget deficit is on course to exceed 5 percent (of GDP). That is why the government has imitated the ‘creative accounting’ it had denounced (while in opposition) and has proceeded with a 400-million-euro debt swap of its own. It is also preparing the securitization of past overdue debt to the state in order to cover its inability to implement its own budget,» PASOK said in a statement. Data from the General Accounting Office shows that the budget deficit was reduced to 7.97 billion euros from 9 billion in the first seven months of 2004. The total 2004 deficit was 12.6 billion; the government’s target for this year is 8.5 billion. Bank of Greece data show that, on a cash basis, the deficit stands at 11.07 billion, from 11.32 billion in the first seven months of 2004. Last year, the cash deficit was 15.8 billion euros and the government’s target for this year is 10.56 billion.