State revenues showed fatigue in first quarter of year

Lackluster budget revenues have led to a reduction of the primary surplus in the first quarter of the year, according to provisional figures released on Tuesday by the State General Accounting Office.

The government is arguing that the shortfall in state revenues of 1 billion euros below the budget target is due to a delay in March in the collection of a one-off payment from Fraport Greece for the concession of 14 regional airports, which was eventually was paid this month. However, even if that 1.234 billion euros had been paid on time, revenues would still have just been within target, well below last year’s overperformance.

The main cause is that tax revenues are showing strong signs of fatigue, with takings from significant sources such as the monthly tax withheld from salaries and revenues, and the 20 percent tax withheld from freelancers’ invoices, showing a drop that comes to 5.88 percent for the former and up to 20 percent for the latter.

Just as the revenues are showing a 1-billion-euro shortfall, meanwhile, it appears that the excessive containment of expenditure is coming to an end: While quarterly data show a reduction by about 1 billion euros from the budget target, March figures in particular reveal that the General Accounting Office eased its tight spending policy last month by paying out the budgeted amounts to various state entities.

In the first quarter the primary surplus shrank by almost 800 million euros from last year to 1.068 billion, still beating the quarterly target by 75 million euros. The budget deficit came to 1.367 billion euros, more than twice as that in the Q1 of 2016 (595 million). Net budget revenues reached 11.415 billion euros in the year to end-March, down 8.1 percent from the target, while spending amounted to 12.78 billion, missing its target by 1.04 billion euros.