The Greek budget deficit posted a 39.2 percent decline in the first quarter of the year, according to the State General Accounting Office, against a targeted 30.2 percent drop for the whole of the year, although there are signs that the state has stopped fulfilling some of its payment obligations. The deficit amounted to 4.326 billion euros against 7.119 billion euros in the first quarter of 2009, while the budget’s net revenues grew by 9.7 percent against the same period last year, compared to an annual target of an 11.7 percent rise as envisaged in the Stability and Growth Program. Budget expenditure went down by 3 percent against a target of 3.5 percent for 2010. The flip side however is that the same data show tax receipts in the January-March 2010 period down by 24.5 percent from one year previously, while sources suggest that value-added tax revenues have frozen. At the same time the market is anxiously waiting for the state to pay its dues, as the government tries to keep spending to a minimum, which means its debts are swelling. State debts are now estimated at over 12-13 billion euros. The situation has increased fears of a vicious circle in which the state will further burden the deficit with those debts, resulting in a constantly growing public debt. This will mean more money required to cover the interest for Greece’s obligations that will additionally make the deficit expand as it also includes interest. These developments are likely to have a huge impact on the recession, deepening it further. It is noteworthy that in the first quarter the only expenditure that rose significantly was interest payments.