Media continue to downplay the decent primary expenditure performance, while focus and point out particularly the revenue lag. They also repeatedly mention total – and not primary – expenditure which includes interest payments and, particularly for this year, also incorporates one-off expenses related to the implementation of PSI.
Just to remind that 6M’12 revenues (excl. tax refunds) eased 4.4% y-o-y to €23.5bn continuing falling short of target by €1bn, primary expenditure was reduced by 7.1% y-o-y to €23.8bn beating target by €1.5bn, while budget deficit stood at €12.5bn, down 5.0% y-o-y bettering target by €2.4bn. Please check also my relevant post on latest budget execution data.
It is true that top line cannot exceed or even meet targets during a recession, particularly when downturn is worse than expected. It is also true that tax evasion is probably the most important challenge for Greece, with limited results so far. Furthermore, it could materially contribute to the country’s fiscal problems solving, also restoring confidence and substantially improving economic outlook and international perception.
But, on the other hand, it is unfair to convey wrong signals to the Greek taxpayers indicating that their significant income reduction is not paying off. Note, that public expenditure reduction, mainly reflects wage and pension cuts, it does not include one-offs, thus it should be perceived as a lowering of the state fixed cost base on a recurring basis. Furthermore, it also unfair to convey a misleading message to the domestic and international community always noting that budget execution is derailing due to revenues falling short of targets, with no reference to primary expenditure and bottom-line beating targets.
Dear journalists, since we have to monitor revenues, expenses and bottom-line (deficit and primary deficit) [on a monthly basis] versus targets and/or last year’s performance, I suggest we should equally focus on all elements and not only to those that probably people “want” to hear or increase reader- viewer- ship.