There’s good news and bad news about Greece’s crushing economic crisis. The good news is that, thanks to relentless pay cuts, tax hikes and slashed pensions, the primary deficit and debt are down. The bad news is that so are expected tax revenues as people slow spending dramatically.
The Greek Finance Ministry is placing its hopes on the second half of the year for a rebound in public revenues, as it showed that in the first five months of the year revenues were 549 million euros ($720.3 million) short of projections, the news agency AMNA reported.
Ministry officials said that with the processing of income tax declarations and the payment of the FAP property tax for 2011 and 2012, the fiscal shortfalls of the January-May period will be covered in the coming months.
Despite the lag in revenues, the budget remains within target given that expenditure has been contained to a considerable extent, while the absorption of social security funds’ allocations from the budget is now at an acceptable level.
The data published show that the primary deficit in the year to May amounted to 970 million euros, against a budget target of 4.1 billion euros. The state budget deficit came to 3.84 billion euros against a deficit of 10.87 billion euros in the same period last year and a target for 7.06 billion this year to May.
As a result, the deficit has dropped to 2.1% of gross domestic product, against 5.6% in January-May 2012. Revenues before tax rebates dropped by 8% from last year and lagged this year’s target by 3%, reaching 17.86 billion euros, while primary spending came to 18.17 billion euros, i.e. 11% less than last year and 8% less than planned.