ECONOMY

Revenues falling short

Regular budgetary revenues in the first four months of the year fell short of the target despite a sharp jump in collected value added taxes (VAT), data from the Finance Ministry yesterday showed. Revenues in the year to April increased by 4.5 percent against an annual target of 6.1 percent. The shortfall was even bigger in the first quarter of the year, with revenues up by just 2.2 percent. Reflecting the success of the government’s drive to get companies to pay their VAT, the yield from this sector rose by 11.7 percent in the first quarter of the year against a target of 8.4 percent. The government’s limited luck in boosting the state coffers contrasted with its success in cutting back on expenditure despite a 29.3-million-euro payment made to the agricultural insurance agency. Primary spending in the first quarter went up by just 5 percent compared with a goal of 5.4 percent. Interest spending was unchanged despite the government’s intentions to reduce it by 7.9 percent on an annualized basis. Heeding calls from the European Commission, the International Monetary Fund and the Organization for Economic Cooperation and Development (OECD) for better budgetary control, Deputy Finance Minister Giorgos Floridis yesterday said the government plans to get input from UK experts on new expenditure norms. He said the new budgetary policy, expected to come into force next year, will set clearly defined and binding objectives as well as the projected financial needs for each and every program. The general accounting office will play a monitoring role. Floridis announced a stricter expenditure policy related to transfers and overtime pay for civil servants in next year’s budget. He also set a 2-percent ceiling on credits as part of a move to rein in operational expenses. The paper, which is a precursor to an invitation for bids, encouraged feedback from 20 organizations, Cypriot and international, Neophytou said.