State Budget Deficit Widens 28% in First Six Months
A greater recession than expected has caused Greece’s central government deficit to widen by almost one third in the first half of 2011 already.
As a result, it has missed an interim budget target under the country’s bailout package, the Finance Ministry has confirmed.
“The current shortfall of revenues is expected to be covered in the second half of the year, as a result of the tax measures of the 2011-2015 mid-term budget plan,” the Ministry said.
Last month, budget slippages caused the government to agree even harsher austerity measures as the country fights to secure a second EU-IMF rescue package.
Between January and June, the central government deficit stood at €12.78bn, greater than the €10.37bn target for the period.
Net budget revenues fell 8.3% year-on-year to €21.81bn, compared with the €25.08bn target.
Spending before payments on the country’s debt increased by 4.5% to €33.16bn; 4% above the set target.
The Ministry attributed the revenue shortfall to a more severe economic slump than anticipated.
The statement added that spending rose to settle public hospital debts, even though the government kept cutting public investment, a decline of 42% year-on-year.
Hurt by austerity, the Greek economy contracted at an annual pace of 5.5% in Q1.
The Greek government has revised downwards its 2011 growth forecast for this year to 3.9%.
