Budget hole grows to more than €6.6 bln

The gap in the state budget has exceeded 6.6 billion euros in the first eight months of the year due to the impact of the pandemic on the economy, although in August alone tax revenues fared better than had been expected.

The data that the Finance Ministry published on Friday for the period from January to August pointed to a primary deficit of €5.484 billion, against a target for a primary surplus of €1.152 billion.

At the same time there was a steep €3.6 billion drop in tax revenues, of which €2.5 billion concerned a shortfall in value-added tax and the various consumption taxes.

For the January-August period, revenues from taxes came to €26.996 billion – €3.645 billion or 11.9% below their original target, with €2 billion of that due to fewer VAT revenues and €500 million from other consumption taxes. Nevertheless, compared to the adjusted estimates for the January-August 2020 period, revenues from taxes have actually increased by about €308 million.

In August alone tax takings amounted to €4.326 billion – €67 million euros off the target for the month included in the 2020 budget. Comparison with the adjusted forecasts, though, shows a surplus of €344 million. This is explained by the collection of both the first and the second monthly installment of the income tax from those who took up the offer to delay submitting their tax declarations till late August.

Sources however speak of a fresh slump in revenues in September, attributed to the postponement of the deadline for the first tranche of the Single Property Tax (ENFIA) to end-October.

Budget spending has predictably increased, by €4.385 billion, because of the compensations and handouts to individuals and corporations hurt by the pandemic. They amounted to €39.731 billion in the year to end-August.

Among the additional costs are the compensation to salary workers and scientists during the quarantine, amounting to about €1.189 billion, the loans issued to companies that totaled €864 million, and the extraordinary grant to the social security funds and the health service to offset the impact from the reduced contributions due to the pandemic, adding up to €683 million, among others.