2024-08-08 03:37:49
Clear indications of higher production primary surplus from the annual target of 2.1% has the financial staff, as a result of which the possibility of revising the target to 2.3% is already being considered, something that will be decided definitively, after the data on the course of its execution is also collected budget during the crucial two months of July – August.
In the first half of the year, the primary surplus at the level of the General Government closed at clearly higher levels compared to last year, as can be seen from the detailed data of the Ministry of Finance. In the January-June period, the consolidated surplus at the level of the General Government amounted to 2.321 billion euros, up from 1.397 billion euros in the corresponding period last year.
Additional percentage
Given that, last year, the year closed with a primary surplus of 1.9%, this “difference” that already exists from the first half, totaling more than 900 million euros, can bring the additional rate of 0.4% mentioned above. The breakdown of the primary surplus at the General Government level (ie what is taken into account to determine whether or not fiscal targets are being met) shows the following:
- In a level central administrationthe primary surplus rose in the first half to 2.04 billion euros, from 1.318 billion euros in the same period last year, mainly thanks to a much better than expected performance of tax revenues.
- In a level local Authorities there is a deterioration (deficit of 89 million euros this year, against a surplus of 96 million euros last year).
- Sta social Security funds, also, we have a slight deterioration this year compared to last year, with the deficit standing at 811 million euros, from 765 million euros last year. The difference is made again this year by income from taxes and insurance contributions. In the first half, tax revenues of 28.119 billion euros have been collected at the General Government level, against 26.766 billion euros last year, while insurance contributions amounted to 13.611 billion euros, from 12.41 billion euros last year.
A decisive two months
Crucial to forming a better picture of the evolution of the primary surplus until the end of the year will be the budget execution data for both July and (mainly) August. In this two-month period, the collection of the “inflated” personal income tax will be recorded, as well as a significant part of the VAT of the summer activity, so as to capture the collection result from this summer’s tourist activity.
There are plenty of signs of outperformance in terms of tax revenues and during this crucial two months, but it remains to be seen what the final performance will be in practice. For example, the final settlement of income tax produced a debit balance of €4.6 billion, which is at least €800 million more than last year. The increase was budgeted for due to the new tax system for professionals, but not as much.
Also, a positive impact is expected from the course of VAT revenues and due to the increased number of visitors during the tourist season and due to the continued increase in electronic payments, which also generates additional revenues. Already, in the six months, VAT revenues have reached 10 billion euros and the year is expected to close with a new historical record. Exceeding the target at the level of primary surplus is reflected positively at the level of debt, but it no longer leads to the production of “fiscal space” capable of being used for the extraordinary financial support of social groups.
This is because, now, the burden has fallen on the net expenditure index. This year, the change in net costs must not be more than 2.6%. For now, this percentage has been kept below this threshold and this is a development that can allow either the production of “space” available to finance measures or the creation of a “piggy bank” to be drawn on during the next year.
On the debt side, the additional primary surplus largely “balances out” the losses that can arise from potentially lower-than-budgeted growth. The benchmark for growth has come in at 2.5%, but most houses are predicting that the rate will remain in the 2-2.2% range. This difference is “evened out”, as the denominator is indeed “shrinking”, due to the smaller GDP, but the conditions are created for a greater containment of the numerator, i.e. the debt (the reduction of the debt and in absolute amount is already underway, so as to contain , at the end of billion euros was the primary surplus at the level of central administration in the first half of the year, at the levels of 353 billion euros).