MoF final data (on a modified cash basis) on Greek budget execution (released on December 24) depicted a softer performance in November compared to that of the previous month, yet all key budget items continued to outperform targets.
Revenues (excl. tax refunds) resumed a negative trend in November retreating by 7.6% y-o-y, after a 14.3% increase in October and a 24.5% drop in September. As a result, 11-month figure eased 4.0% y-o-y (10M’12: -3.7%) to €45.9bn, slightly outperforming 11-month target by €0.37bn or 0.8%. According to MoF, better-than-expected revenues are attributed to increased income taxes, other taxes incl. solidarity levy, property taxes, non-tax revenues and insurance taxes.
Primary expenditure continued heading south for tenth month in a row, at an accelerating pace, slipping by 18.3% in November, following a drop of 4.6% in October and 5.3% in September, bringing the 11-month figure down 9.5% y-o-y to €42.0bn, 1.1% better than target. The cut in primary expenses is mainly due to a 6.9% y-o-y reduction in salaries & pensions to €18.4bn as well as a drop in grants to social security sector by 8.4% y-o-y to €15.2bn.
Interest payments dropped to €11.4bn down 26.4% y-o-y (FY’12 target: -28.2%), in line with the 11-month target. It is reminded that almost half of 11M’12 interest payments (€6,083m) was recorded in March and was related to the implementation of the PSI agreement.
Overall, 11-month budget deficit narrowed by 40.2% y-o-y (the second highest drop so far in 2012) to €12.85bn from €21.5bn last year, with November recording a deficit of €0.59bn from surplus of €0.46bn in October and deficit of €0.24bn in September. It is noteworthy that bottom-line was supported by the significant positive contribution of PIB (Public Investment Budget), which exhibited a deficit of €0.67bn in 11M’12 from €1.64bn last year. Furthermore, 11-month reported figure bettered 11-month target by €2.2bn or 14.6%, still providing a safety cushion for the last month of the year.
Primary balance turned negative in November recording a deficit of €0.28bn from surplus of €0.93bn in October and deficit of €0.66bn in September. Furthermore, 11-month primary deficit stood at €1.42bn, down 76.2% y-o-y, significantly beating 11-month target by €2.17bn or 60.5%. It is also noteworthy that following 11M fiscal performance, Alternate FinMin Christos Staikouras stated that 2012 budget primary deficit will beat FY target of €4.58bn.