MoF preliminary data (on a modified cash basis) on Greek budget execution depicted a worse performance in December compared to that in November or October, attributed to seasonal (PIB) and one-off effects (debt buyback) along with a top-line pressure and a stall in cost cutting. Nevertheless, both 2012 budget deficit and primary deficit outperformed targets mainly due to the stronger fiscal performance particularly in the Aug-Oct period.
Revenues (excl. tax refunds) retained a negative trend for second consecutive month at an accelerating pace retreating by 14.5% y-o-y in December after falling 7.6% in November. As a result, 12-month figure eased 5.3% y-o-y (11M’12: -4.0%) to €51.4bn, in line with target. Tax refunds were contained at lower levels (-37.1% vs target of -30.2%) resulting in a relatively better performance of net revenues, which fell 4.1% y-o-y to €48.1bn.
After ten consecutive months of significant cost cutting, primary expenditure remained flat y-o-y in December, following a drop of 18.3% in November and 4.6% in October, bringing the 12-month figure down 8.6% y-o-y to €47.1bn, 0.9% better than target.
Interest payments retreated 25.2% y-o-y (vs target of 28.2%) to €12.2bn. It is noteworthy that December figure (€790m) was affected by the one-off cost of debt buyback, while almost half of 2012 interest payments (€6.1bn) was recorded in March and was related to the implementation of the PSI agreement. Overall, total expenditure dropped 12.3% y-o-y to €61.5bn slightly (0.6%) outperforming target.
2012 budget deficit narrowed by 30.1% y-o-y to €15.9bn (8.2% of GDP) from €22.8bn last year (10.9% of GDP), with December recording a deficit of €3.06bn from €0.59bn in November and surplus of €0.46bn in October. It should be pointed out that Public Investment Budget (PIB) had a (relative) negative impact on December bottom-line contributing a deficit of €1.85bn, while its y-t-d amount stood at just €0.67bn until 11M’12. Excluding PIB, 2012 budget would have dropped 33.0% compared to the reported 30.1%. Furthermore, 2012 reported figure (€15.9bn) bettered target by €0.4bn or 2.5%, mainly reflecting the stronger fiscal performance evident over the Aug-Oct period.
Primary balance remained negative in December recording a deficit of €2.27bn significantly worse than the figures reported in November and October (deficit of €0.3bn and surplus of €0.9bn respectively). Nevertheless, 2012 primary deficit narrowed 42.7% y-o-y to €3.68bn, corresponding to 1.9% of GDP from 3.1% last year, significantly beating target by €0.9bn or 19.5%.