ECONOMY

Spending cuts offset revenue fall

Provisional budget data released yesterday by the Finance Ministry showed that both revenues and expenditures have strayed considerably from the original targets, effectively requiring nearly an entirely new budget. Revenues continued to shrink for yet another month, 1.4 billion euros below the target set for the first half of the year, but this has been somewhat offset by a considerable reduction in spending. Official data showed net budget revenues reaching 55.1 billion euros this year, which would be 1.5 billion euros off the original target, while primary expenditures for the year as a whole are projected at 2.2 billion euros less than originally planned. Data processing has revealed that income tax revenue will be lower by 1.86 billion euros, but this is expected to be covered by indirect taxes: Value-added tax and special consumption taxes are set to contribute 3.4 billion euros more than initially calculated. As for expenses, there there will be a redistribution of grants to social security funds, while the budget had for the first time incorporated the debts of hospitals, expected to reach 1.8 billion euros in 2010. First-half data also showed the deficit at 9.754 billion euros, down from 17.8 billion euros in the same period last year. This constitutes a 45.4 percent annual decline against a target reduction of 39.5 percent. Separately, Greece posted a current account surplus of 249.5 million euros in May, compared to a deficit of 1.93 billion euros in the same month last year, boosted by European Union agricultural payments. In the year to May, the Bank of Greece said the current account gap widened 3.3 percent year-on-year, to 12.58 billion euros. The market, however, continues to suffer as recession has hit it hard. Industry turnover may have grown by 13.6 percent in May, compared with the same month in 2009, but new orders have shrunk by 1.5 percent, signaling negative developments in the future, Hellenic Statistical Authority (ELSTAT) data showed. Tourism receipts in the year to May dropped 8.8 percent year-on-year to 1.61 billion euros.