Eurobank: The budget deficit of the pandemic is decreasing

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The Greek economy is in the process of reducing the budget deficits created by the pandemic, a course necessary to contain the financing costs of the Hellenic Republic and to cultivate positive expectations for the medium-term dynamics in terms of real growth, the weekly bulletin “7” Eurobank, on the occasion of the monthly execution data of the state budget.

According to Eurobank, according to the monthly state budget execution bulletin, the net state budget revenues in the period January-May 2022 amounted to € 22.286 billion (on a modified cash basis), exceeding the target by € 1.886 billion or. 2%. On the contrary, on the expenditure side, it lagged behind the target by € 0.549 billion or 2.0% (€ 26.352 billion vs € 26.901 billion).

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As a result, the government budget balance, ie the difference between revenues and expenditures, stood at a deficit of € 4.066 billion against the deficit target of € 6,500 billion. Respectively, the primary deficit was lower than the target by € 2.426 billion. (€ 1.487 billion vs € 3.913 billion).

Finally, compared to the 5 months of January-May 2021, net state budget revenues increased by € 4.011 billion or 18.0% and the corresponding expenditures decreased by € 2.722 billion or 10.3%, reflecting to some extent the resumption of economic activity, withdrawal of many of the support measures and strengthening of GDP.

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The excess of net state budget revenues in the 5 months January-May 2022 came mainly from the category of taxes. Analytically, tax revenues amounted to € 20,613 billion (on a modified cash basis), exceeding the target by € 2,843 billion or 16.0%. Taxes on goods and services were above the target by € 0.837 billion or 7.5% (mainly due to VAT on other products and services and secondarily on petroleum products and their derivatives), followed by: regular real estate taxes (€ 0.829 billion or 146.5% due to the collection of the first installment of ENFIA in May 2022 which was scheduled to be collected in September 2022), income tax (€ 0.550 billion or 11.5% mainly from individuals and secondarily from legal entities), other current taxes (€ 0.397 billion or 77.4% mainly due to vehicle taxes), other taxes on production (€ 0.144 billion or 28.5%), taxes and duties on imports (€ 0.057 billion or 49.6%) and capital taxes (€ 0.027 billion or 39.7%).

The backlog of state budget expenditures in the 5 months January-May 2022 came from the categories of appropriations under distribution (excluding PDE and TAA) with a backlog of € 1.021 billion, acquisitions of fixed assets (€ 0.471 billion) and expenditures Durability (€ 0.401 billion). The categories of public investment program expenditures (€ 0.780 billion), transfers (€ 0.401 billion) and purchases of goods and services (€ 0.125 billion) moved in the opposite direction, ie exceeding the target.

Based on the above data, it proves that the Greek economy is in the process of reducing the budget deficits created by the pandemic, a course necessary to contain the financing costs of the Hellenic Republic and to cultivate positive expectations for the medium-term dynamics in terms of real growth.

According to the European Commission’s spring economic forecasts, the general government balance in ESA 2010 terms is estimated at a deficit of 4.3% and 1.0% of GDP for 2022 and 2023 respectively (from a deficit of 7.4% of GDP in 2021). The corresponding primary result, ie excluding the payment of interest on expenditure, is estimated at a deficit of 1.9% of GDP in 2022 and a surplus of 1.3% of GDP in 2023 (from a deficit of 5.0% of GDP in 2021). Finally, the estimates for the public debt are placed at 185.7% and 180.4% of GDP for the years 2022 and 2023 respectively (from 193.3% of GDP in 2021). The profile of public debt (central government), after the previous arrangements, remains favorable, with the weighted average duration at 18.7 years in 2021 from 7.1 years in 2010, the annual weighted average interest rate at 1.57% in 2021 from 4.06% in 2010 and the formal sector to hold 77% of public debt in 2021 from 16% in 2010.

Source: Capital

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