A primary surplus, at what cost?

Greece’s primary budget surplus in the January-July period came to 3.5 billion euros, exceeding the target by 2.7 billion euros. But alarm bells are ringing because, according to Finance Ministry data, this was achieved by curtailing state spending by 3.3 billion euros whereas net revenues were short 621 million euros on account of a 1-billion-euro shortfall in public investment program (PIP) revenues. However, the picture with regard to revenues before tax rebates was positive, exceeding the target by 729 million euros. The seven-month period has shown that there may be some shock absorbers in the economy but these are being used up.

According to the Finance Ministry, net revenues in the state budget came to 28.019 billion euros, a shortfall of 621 million euros, or 2.2 percent below the budget’s target this year. The precise figures concerning different sectors will be revealed when the final bulletin is published.

July was a bad month for revenues as they were 755 million euros below the month’s target set in the state budget and 354 below the regular budget’s target. This was the month in which the first installment of income tax was paid and in which the new value-added tax (VAT) rate (to 24 from 23 percent) came into effect. The regular budget’s net revenues came to 25.972 billion euros, or 422 million (1.7 percent) above the 2016 target. Returns (excluding those from the program liquidating overdue debt obligations) came to 1.72 billion euros, marking an increase of 220 million over the target. PIP revenues came to 2.047 billion euros, down by 1.043 billion against the 2016 budget target.

In July, total state budget net revenues came to 5.031 billion euros, 755 million below the target for the month. Regular budget revenues were 5.012 billion euros, 354 million below the month’s target. Returns of revenues in July 2016 (excluding those from the program liquidating overdue debt obligations) came to 249 million euros, an increase of 40 million euros against the month’s target (209 million euros).

Spending according to the state budget for the seven-month period came to 28.829 billion euros, down 3.297 billion from the target of 32.126 billion.