Revenues (excl. tax refunds) rebounded in June (up 2.0%), after easing by 14.9% and 12.8% in the previous two months, bringing the 6-month figure down 4.5% y-o-y. Nevertheless, 6M’12 revenues continued falling short of targets (by €1.05bn or 4.3% in 6M’12), mainly reflecting lower-than-anticipated income tax revenues and transactions taxes, also attributed, in our view, to the election period. Furthermore, primary expenditure continued heading south for fifth month in a row easing by 14.1% in June, following a drop of 16.6% in May and 12.5% in April, bringing the 6-month figure down 7.1% y-o-y and beating 6-month target by €1.5bn or 5.9%.

Overall, 6-month deficit dropped 6.2% y-o-y (for the first time so far in 2012) to €12.3bn in 6M’12. Bottom-line was supported by the significant positive contribution of PIB, which exhibited a deficit of €0.5bn in 6M’12 from €1.4bn last year. Furthermore, 6-month reported figure materially bettered 6-month target by €2.6bn or 17.2%, a quite impressive performance providing a cushion for the fiscal adjustment efforts in the coming months.

It is noteworthy that primary balance remained negative for fourth consecutive month with 6-month primary deficit at €3.15bn (down 48.5% y-o-y) significantly beating 6-month target by €2.1bn or 40.2% and implying a primary deficit of €0.8bn in June from €0.6bn in May and €1.4bn in April.