The Greek Ministry of Finance seeks to regain the ground lost in the budget execution of the first half of the year, proceeding with the establishment of a special working team to monitor the progress of revenue and return on additional measures, which were included in the medium-term plan.
This would be a difficult task, if not impossible. The big issue is not whether the ministry could raise the targeted amounts through special contributions, pension cuts, vehicle taxes etc, but whether it could stem the decline of revenues due to the deep recession. The fall in consumption, inability of many enterprises to meet tax obligations and shortcomings in the tax administration have resulted in a shortfall of €3.25 billion in revenue in Jan-Jun 2011 period.
Given that growth is not expected to regain a positive sign soon, the widening of the gap is unavoidable. Currently, the budget gap is restrained to €2.5 billion, as the government has “frozen” about half of the Public Investment Program. But this cannot go on until the end of the year, as excess of expenditure occurs for most of the ministries during the last quarter.
Based on current data, revenue should reach €33.7 billion in the second half, or about €5.5 each month on average. Therefore, the monthly monitoring of budget execution, especially on revenue, is necessary for the economic team in order to minimize deviations.
A 15-member team of executives from various departments of the ministry will undertake the difficult task to assess the revenue data and brief the Finance Minister Evangelos Venizelos. The stretch of the team would be over by late 2012, therefore it would be responsible also for the next budget, which should have for the first time a slight primary surplus of €2 billion, according to the agreement between Greece and the troika.
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