NEWS

Spending down, revenues weak

While state spending fell by 5 percent in the first quarter, mainly due to a sharp reduction in interest payments, revenues failed to reach even half the projected increase, according to government figures made public yesterday. In its bid to reduce the soaring budget deficit to below the 3 percent of GDP ceiling by the end of 2006, as dictated by eurozone regulations, the government has pledged to trim expenditure and boost revenues, mainly through a crackdown on tax evasion. As of April 1, VAT rates were hiked from 0.5-1 percentage points while the tax on cigarettes and alcohol was also raised. The figures for January, February and March released yesterday by the General Accounting Office show that expenditure fell 5 percent compared to the first quarter of 2004. Primary spending was down 1.6 percent (with a targeted annual rise of 4.9 percent), while interest payments fell 15.7 percent (against a targeted 3.5 percent rise). But revenues rose only 4.5 percent, against a target of 11.4 percent. The January-February rise was 3.7 percent.