The budget deficit was contained in the first two months of the year, but the considerable slump in value-added tax revenues by 8.6 per cent and the huge excess in spending for social security funds are the two main threats to the budget, even in its revised form.
Data issued on Wednesday by the Finance Ministry show that the deficit is now under control, given that in the January-February period it came to 495 million euros against a target of 879 million.
The primary result of the budget -which does not include interest payments- was positive, as the surplus amounted to 367 million euros against a 22-billion-euro target deficit. The question is what will happen in the election period, during which fiscal rules are always relaxed.
The fact that the deficit is within targets is mostly thanks to the reduction in the Public Investment Program and its revenues that exceeded expectations and covered the lagging revenue.
The program has brought in 251 million euros more than forecasted, taking budget revenues in the year to February 29 to 9.258 billion euros against a target for 9.239 billion euros.
Consumption taxes improved the overall picture as they fetched 131 million euros more than expected. This was thanks broadly to the special consumption tax on energy products (163 million euros) and tobacco products (134 million euros).
In total budget revenues lagged by 2.8 per cent or 232 million euros. On the expenditure side, primary spending fared better than expected by 306 million euros, amounting to 9.562 billion euros, but the main problem is in the disbursement for social security funds, which has already amounted to 27.5 per cent of the annual sum. Worse, the country’s main fund, Social Security Foundation IKA has already collected 64.4 per cent of the year’s planned allocation.