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The dramatic deviations registered in the incomes and expenditures of the state budget in January, would most likely lead to need of additional measures in 2012.

Budget revenues are lagging behind with 470 million euro, the expenditures exceeded the targets by 951 million euro, and the future looks even more bleak, given that the recession is deepening and tax revenues become more uncertain.

According to data released by the Ministry of Finance, the deficit in the state budget for January amounted to 490 million euro, compared with the surplus of 154 million euro in January 2011 and the primary budget deficit reached 33 million euro during the first month of the year, as compared with the primary surplus of 747 million euro in January 2011.

Difference in the data

Between the data of the Ministry of Finance and that of the Bank of Greece, published on Thursday, there is a significant difference due to the fact that the data of the Bank of Greece are presented on a cash basis, i.e. actual cash flows are registered.

Reporting of revenue on an accrual basis and their transferring to 2011 led to huge deviations that would pose a problem in the future.

In particular, the net amount of the net revenues in the state budget reached 4.872 billion euro in January 2012, registering a decrease of 4.9 percent as compared to January 2011. The new target set in the budget envisaged a pace of revenue growth of around 4.3%.

The difference between goals and implementation leads to a slowdown in the revenue of 470.2 million euro, in the very first month of implementation of the budget.

In comparison with the initial target of the budget, which provided for an increase in the revenues of 6.1%, the slowdown exceeds 500 million euro.

The expenditures in the state budget in January 2012 reached 5.362 billion euro, accounting for an increase of 8% as compared with January 2011, provided that the new target for their reduction was 8.4%. This difference leads to an exceeding of the expenditures by about 812.2 million euro.

The Ministry of Finance argues that the reasons for the increase in expenditures compared with January 2011 lie in the overrun of the primary cost in the regular budget by 410 million euro as well as the excess payments to hospitals for the settlement of old debts of 180 million euro.

The increase in primary expenditure reflects the increase in subsidies to insurance funds by 674 million euro aimed to make up for a significant drop in their revenues from insurance contributions.

Furthermore, as a result of the measures envisaged in the Memorandum, in 2012 spending should be limited to 3.2 billion euro.

In any case, to eliminate the deviations the Ministry of Finance set new goals for January retrospectively claiming that the target for January was for 4.795 billion euro to be collected, therefore, with the proceeds amounting to 4.872 billion euro a surplus was even achieved of about 77 million euro!

Following the same logic, by adjusting the initial objectives the overrun of the costs also disappears, and it turns into savings.

Overdue debts turn into a "lifebelt"

Settlement of overdue debt proved to be a "lifebelt" for the budget revenues in February, although the reduced VAT receipts for yet another month trouble the economic team of the government, which found that without any regulations and with a "frozen" market prospects for implementing the budget are not optimistic.

In the last two days of February taxpayers altogether visited the tax offices to settle outstanding obligations. As a result, according to preliminary data of the finance ministry revenues registered a growth of around 12%.

In particular, according to these data in February revenue reached 3.4 billion euro, as compared with 3.03 billion euro for the same month last year, although revenue from VAT decreased by 1.7%. In any case, the revenues of the tax offices increased by 20.7%, while those of the customs decreased by 3.2%.

The political leadership of the Ministry of Finance believes that the coming months will be particularly critical, including June, when it will become clear whether the objective for reducing the deficit this year to 6.7% of the GDP is achievable or will additional measures be required, that will come with the new recommendations for the period 2013-2015.

What do they attribute the delay to

The Ministry of Finance attributes the slowdown in net revenues of the state budget, registered in January, mainly to the reduction in revenue from direct taxes due to the closure of the collection of extraordinary tax on revenues from the most profitable companies, imposed in 2011, as well as to the reduction in revenue from indirect taxes (mainly VAT) due to reduction in domestic demand (around -9.3% on an annual basis in real terms).

Ministry of Finance added, however, that significant progress has been made in the collection of outstanding debts by strengthening controls, as well as in the special taxes on consumption resulting from the increased special tax on tobacco consumption.

Meanwhile, the U.S. rating agency Moody's announced that it lowered the long-term credit rating of Greece from "Ca" to "C".

In a communication the agency notes that this decrease is a result from the initiated procedure for a voluntary exchange of Greek government bonds, which would mean losses of 70% for the private creditors who hold them.