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Return to budget deficit in April

12 May 2013 / 15:05:01  GRReporter
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The state budget has returned to the initial levels of the deficit in April, following the slowdown in revenues which reached 473 million euro. The risk of a continued slowdown of revenues is twofold, since it would block the reduction of the value added tax (VAT) for eateries, and, in parallel, it would trigger the additional measures clause.

According to provisional data of the Treasury, during the four months from January to April, the deficit reached 2.449 billion euro compared to 9.148 billion euro in the same period last year.

If interest is deducted, the initial deficit reaches 330 million euro and, in the first quarter, the budget had a surplus of 520 million euro. The deficit for the quarter was significantly reduced compared to last year, but it is less compared to the goal of the Ministry of Finance, which provided for a deficit of 3.613 billion euro for the first four months. Analytical data indicate serious problems in the implementation of the budget, the most serious of which is the delay of revenues, which amounted to 473 million euro for the quarter, while it was 352 million euro in the first three months.

Deficit reductions compared to last year are due to:

* Delays in the return of taxes amounting to 544 million euro. The Ministry of Finance anticipated income tax refunds to the amount of 869 million euro for the first 4 months, but less than half of that amount was gained - 325 million euro.

* Postponement of the payment of funds under the public investment programme amounting to 914 million euro. The Ministry of Finance predicted transfers for projects under the programme during the first four months of 2013 amounting to 1.75 billion euro, but it transferred 836 million euro, despite the fact that the economy has a direct need for liquidity and investment.

* Deferral of functional expenses of ministries and other government organisations. Initial costs for the four months amounted to 14.651 billion euro compared to 16.102 billion euro provided, i.e. payments of more than 1 billion euro have been delayed.

* Gaining more EU funds within the public investment programme. The government anticipated 1.06 billion euro, but received 1.715 billion euro due to massive requests for payments that were made at the end of 2012.

* Total budget expenditures have been reduced by 2.529 billion euro compared to what was provided for by the Ministry of Finance.

Slowdown in revenues

The amount of net revenues (with tax refunds and from the public investment programme) of the budget amounted to 15.719 billion euro, and it has increased by 762 million euro, or 5.1% compared to the target for the first quarter of 2013 - 14.957 billion euro.

The amount of net revenues (with tax refunds but without the public investment programme) of the budget amounted to 14.003 billion euro, and it has increased by 106 million euro, or 0.8% compared to the target for the first quarter of 2013 - 13.897 billion euro. The situation with incomes is satisfactory, but if calculated together with tax refunds, there is a black hole amounting to 473 million euro. Net revenues of the state for the first four months (without refunds) amounted to 14.267 billion euro, compared to the planned 14,740 billion euro. The "surplus" in revenues is due to the fact that the total amount is calculated together with returned taxes, but since these amounts are lower than planned, the total amount is higher than that originally planned.

Deputy Minister of Finance Christos Staykouras admitted that there is a small problem regarding incomes, but said that there has been an improvement since April and direct and indirect taxes corresponded to what was planned.

In April, categories of incomes that were late include:

* VAT of all categories, with 66 million euro, or 5.1%, of which 43 million euro came from VAT on petroleum products

* Excise duty on petroleum products - 8 million euro, or 2.2%

* Other non-tax revenues - 101 million euro, or 27.6%

Higher than planned revenues include:

* Income tax - 40 million euro, or 7.1%

* Property Tax - 69 million euro, or 19.1%

* The three other direct consumption taxes, in particular the excise duty on tobacco - 36 million euro, or 19.1%

* Indirect taxes - 14 million euro, or 51.1%, mainly due to late payments of VAT.

Reduced costs

Budget expenditures amounted to 18.168 billion euro and were 2.259 billion euro less compared to what was planned - 20.697 billion euro. Compared to 2012, budget expenditures have fallen by 7.123 billion euro, or 28.2%.

Hospitals are operating below the minimum

Stabilisation of the reduction of costs is considered impossible; therefore, the final amount of costs cannot be lower than that intended at the end of the year. Spending has already been limited compared to 2012, and many public services such as hospitals and schools are operating below the minimum.

In his statement Staykouras said that, with the completion of the quarter, the financial environment in the country is improving steadily, adding that Greek society can now be assured that its sacrifices have improved the country's finances.

Tags: budget budget deficit revenues expenses taxes VAT excise duties Christos Staykouras
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