ECONOMY

Budget revenue shortfall growing

The 2007 budget has shown a 1-billion-euro deficit in the first nine months of the year, highlighting the deviations from the original targets and the effort that must be made in the last quarter to meet the revised fiscal targets, as set in the 2008 draft budget. In the first three quarters of the year the state budget deficit stood at 9.68 percent, marking a 54.2 percent rise over the same period in 2006 and exceeding not only the original annual target of -9.05 billion but also the revised one of -9.54 billion. The revenue shortfall amounts to -665 million, as net revenues grow at a rate of 6 percent rate, compared to the new annual target of 7.1 percent growth. This is due to tax rebates, which rose by 22.6 percent instead of the targeted figure of 2.4 percent, and an increase in ordinary revenue of just 7.4 percent, against a target of 8.6 percent. The government is optimistic that the picture will improve in the remaining months of the year. Already in October, the growth rate of revenues was higher than the revised targets. However, the state will need to collect -14.6 billion in the last quarter of the year. The picture is equally gloomy also with regard to expenditures, which were exacerbated by the election period, the extraordinary needs created by the forest fires in August and the settlement of the state’s debt of 613 million euros to Olympic Airways. Even with the revised targets in the draft of next year’s budget, the spending gap totals -340 million. The General Accounting Office and the ministry will have to make great efforts to contain spending to at least meet the new revised targets. In the Public Investment Program, the shortfall is considerable both in spending and in revenues: Expenditure has grown 43 percent instead of 6.2 percent, while revenues are up 29.7 percent, compared to a 16 percent target. On Friday, according to sources, the European Commission will forecast a 2007 deficit of 2.9 percent of GDP, against a target of 2.6 percent.