Warning bells sounded at Greece’s finance ministry this week with the announcement that net revenues for July 2016 missed the budget target by 500 million euros, an ominous sign given that an automatic spending cuts mechanism is now prominently featured in Greek law.
Warning bells sounded at Greece’s finance ministry this week with the announcement that net revenues for July 2016 missed the budget target by 500 million euros, an ominous sign given that an automatic spending cuts mechanism is now prominently featured in Greek law.
The figure comes from the preliminary data submitted to the ministry’s revenue and budget services.
The missed revenue target comes despite increases in direct and indirect taxes passed by leftist Greek government in the previous two months, with the first installments of income taxes – emanating from fiscal 2015 – given a late July 2016 deadline for payment.
According to reports, the negative development caused reverberations amongst the ministry’s top leadership over the course of execution of the remaining months in the 2016 budget. The memorandum-mandated goal for 2016 remains a primary budget surplus of 0.5 percent, graduating to even more ambitious targets through 2018.
Failure to meet the primary budget surplus goal – as a percentage of GDP – will mean activation of the spending cuts mechanism, dubbed the “cutter” by the political opposition and local media. Whether or not the fiscal goal is met will be announced in May 2017.
According to reports, net revenues flowing in state coffers in July 2016 reached 4.8 billion euros, missing a target of 5.3 billion euros.
Nevertheless, revenues for the first seven-month period remained above the stated target.