Budget goals are looking hazier

The government is roughly on track with its 10-month budget goals but data released yesterday showed that it needs to pick up the pace of housekeeping efforts in order to meet its full-year goals. The Finance Ministry said it cut the budget shortfall for the January-October period by 30 percent to 17.4 billion euros versus a target of 32 percent for the same period. However, the full-year target aims at cutting the gap by 37 percent to 19.4 billion euros – a target that may be out of the government’s reach unless revenues pick up or the ax falls even harder on government spending. Revenues in the 10-month period rose 3.7 percent, versus an annual target of 8.7 percent, while spending has come down by 7 percent, against a full-year target of 7.8 percent. The news comes ahead of an expected upward revision of 2009 budget data on Monday by the EU’s statistics agency Eurostat. Additionally, officials from the International Monetary Fund, the European Union and the European Central Bank will be in Athens next week to monitor progress ahead of a third disbursement of loans due in November. According to a Greek government source, Greece will cut its 2010 budget gap less than previously planned to 9.3 percent of gross domestic product in 2010 due to weak revenue growth and the upward revision of last year’s deficit. The current projection for the 2010 deficit is 7.8 percent. Austerity policies to get the deficit down to below 3 percent of GDP by 2014 have driven the economy into deep recession, making it harder for the government to collect revenues and plug the fiscal hole. Greece’s economy is expected to contract by 4 percent in 2010. Flash third-quarter GDP data is due tomorrow. In its draft 2011 budget, released in early October, Greece had projected this year’s shortfall would decline to 7.8 percent of GDP from 13.8 percent in 2009. The government is expected to officially revise 2010 deficit data in its final draft of the 2011 draft budget on November 18.