The execution of the state budget ran into seven major problems in the first four months of the year. The budget deficit may be shrinking at a higher rate than envisaged in the Stability and Growth Program, but there are some significant deviations that may develop into major problems in the next few months, causing a derailment of fiscal adjustment efforts and possibly the imposition of new austerity measures. The seven problems relate to the expenditure side and chiefly concern the absorption by social security funds of more money than had originally been allocated to them in the first four months of 2010. There is also the additional problem of the revenue shortfall that continued in the January-April period and now amounts to 243.6 million euros in net revenue and 796.5 million euros before tax rebates. Nevertheless, the situation regarding revenues is somewhat better than appears at first glance, since the Finance Ministry has frozen tax rebates until end-May. Tax rebates were down by 26.7 percent in the first four months of 2010 compared with the same period last year. However, when tax rebates recommence the «black hole» in revenues will grow even bigger. But the government is hoping that the difference will not be that great, as the measures to increase cash inflows are yet to bear fruit. As far as expenditure is concerned, the biggest problem concerns social security funds and the money they have already disbursed. The seven main concerns are as follows: First, the grant to the Self-Employed Pension Fund (OAEE). In the first four months of the year OAEE disbursed no less than 65 percent of its annual credits from the state budget; in other words it has drawn 390 million euros from a total of 600 million. Second, healthcare spending, where the portion of funds already paid from the budget has reached 38.7 percent of the annual amount: In the first four months, some 511 million euros has been paid out of a total of 1.3 billion euros allocated in the budget. Third, the OTE telecom employees’ fund (TAP-OTE). This fund has disbursed 280 million euros in the first four months of 2010 from a total of 678 million, so its absorption rate has already reached 41.4 percent. Fourth is IKA, the Social Security Foundation. IKA has already disbursed 978 million euros, or 39.9 percent of its 2010 allocation of 2.45 billion euros. Fifth is public transport, where 63.3 percent of total allocated funds has already been absorbed. The Stability and Growth Program provides for 257 million euros for public transport and 163 million has already been drawn from state coffers. The sixth problem relates to payments to the European Union. In the January-April period Greece paid 1.16 billion euros out of a total of 2.71 billion euros it must transfer this year (42.9 percent). And lastly, the Seamen’s Pension Fund (NAT), where absorption of allocated funds is marginally higher than envisaged (33.5 percent). Budget deficit shrinks in first quarter The reduction in expenditure, the freezing of tax rebates and the cut in the Public Investment Program have led to a reduction in the budget deficit in the first four months of the year, according to data of the state General Accounting Office. Compared with the same period in 2009, the budget deficit has declined by 41.5 percent against a targeted reduction of 35.1 percent to reach 6.3 billion euros compared to 10.7 billion. The data show that spending was cut by 7.9 percent against an annual target of 4.8 percent to reach 20.2 billion euros. Net revenues have grown by 10 percent, against an annual target of 11.7 percent to reach 15.9 billion euros, a shortfall of 243.6 million euros. Revenues before tax rebates grew by just 6 percent against an annual target of 10.9 percent, revealing a shortfall of 796.5 million euros, while tax rebates were down by 26.7 percent. The expenditure of the Public Investment Program declined in the January-April 2010 period by 39.1 percent to 2.3 billion euros from 3.7 billion euros in the same period last year. The annual target set in the Stability and Growth Program was 1.2 percent growth relative to 2009.