Optimism for a primary surplus

Finance Ministry says indirect tax revenues beat target by about 14 percent in May for the first time

Despite a primary deficit of 984 million euros in the period from January to May 2013, the budget is within target and, according to Alternate Finance Minister Christos Staikouras, “the fiscal picture of the country has improved over these five months.”

The high-ranking ministry official added that based on data for the year until May, it will be possible for the budget to end 2013 with a primary deficit.

Public revenues continue to lag, however, and Finance Ministry data issued yesterday showed that revenues before tax rebates are down by 562 million euros compared to the target. According to the figures, the shortfall of 248 million euros concerns reduced intake from direct taxes and 254 million euros from indirect taxation.

In May alone total revenues amounted to 3.5 billion euros, lagging 4 percent below the monthly target, a decline that is exclusively attributed to direct taxes.

However, “May was the first month in which we not only met our target for indirect tax revenues, as we also did in April, but have also exceeded it by about 14 percent,” said Staikouras.

He went on to estimate that in the next few months – with the processing of income tax declarations and the payment of the FAP property taxes of 2011 and 2012 – the fiscal shortfall of the first five months of the year will be covered.

The state budget deficit amounted to 3.86 billion euros by May 31 from 10.87 billion last year and a target of 7.06 billion euros. This constitutes a deficit reduction from 5.6 percent of gross domestic production last year to just 2.1 percent this year to May.

Meanwhile, the Hellenic Statistical Authority (ELSTAT) announced yesterday that the consumer price index (CPI) posted a decline for a third consecutive month, showing a deflation of 0.4 percent in May, on an annual basis. In April, the CPI had dropped by 0.6 percent and in March by 0.2 percent.

ELSTAT also announced that industrial output in April continued to shrink, by 1.8 percent from the same month in 2012. This compares with a 2.9 percent annual decline a year earlier.