Update: Greece Jan-Aug Govt Deficit -32.3% Y/Y, Beats Target
ATHENS (MNI) - Greece's government deficit shrank 32.3% in the first eight months of this year compared to the January-August period of 2009, the Greek Finance Ministry announced Monday.
The ministry said this magnitude of deficit reduction outpaced the target in its fiscal austerity plan, which calls for a 26.5% reduction in red ink over the first eight months of the year. For all of 2010, the government is seeking to reduce the deficit by 39.5% compared with 2009.
In euro terms, the January-August deficit was E14.49 billion, down from E21.38 billion in the same period last year.
The ministry said that while the government was ahead of schedule in expenditure reduction, it was lagging in revenue collection. Net revenues in the ordinary budget were up 3.4% over the first eight months of this year, well below the targeted increase of 13.7%. The ministry noted that the revenue result for the first eight months only partially captures an increase in the VAT rate by two percentage points, which took effect July 1.
Ordinary expenditures dropped 7.6% in the January-August period, somewhat ahead of the government's targeted decrease of 5.5%. Primary expenditures plunged 12.1%, far outpacing the target of -5.8%. This was due mainly to cuts in health and social security spending as well as lower spending on salaries and pensions in the public sector.
On the other hand, the government's interest payments increase 6.6%, more than the 5.6% it was hoping for. Spending on public investment declined 32.8% in the period, the ministry said.