MoF preliminary data (on a modified cash basis) on Greek budget execution in April depicted a further widening of bottom-line outperformance (i.e. actual minus target) by c€0.5bn m-o-m with budget and primary balance beating 4-month target by €3.3bn compared to >€2.8bn in Q1’13 and €1.84bn in 2M’13. Better-than-targeted fiscal performance is attributed to lower expenditure and higher PIB surplus and – to a lesser extent – smaller tax refunds.

Revenues (excl. tax refunds) retained a negative trend in April for sixth consecutive month, yet at a decelerating pace, retreating by 6.4% (from 13.0% in March, 1.7% in February and 11.4% in January) bringing 4-month figure down 8.5% y-o-y to €14,267m. Furthermore, 4M’13 revenues fell short of target by 3.2% or €473m with the revenue gap widening by €122m m-o-m. In particular, revenue shortfall stood €239m in January, eased by €33m in February and then increased by €142m in March and by €122m in April.

According to MoF, revenues from direct and indirect taxes in April were in line with monthly targets for the first time so far in 2013 and reflect higher (vs targets) revenues from: VAT (by €66m), special consumption on energy products (by €8m) and other non-tax revenues (by €101m) and lower revenues from: income tax (€40m), property taxes (€69m) and other indirect consumption taxes (€36m).

In particular, direct taxes slipped 7.2% in April and 7.9% in 4M’13 to €5,257m, reflecting a drop in income tax by 2.1% in April and 3.3% in 4M’13 to €2,609m and a 9.2% in April and 38.9% decline in property taxes to €915m. Indirect taxes retreated 6.1% in April and 12.6% in 4M’13 to €7,624m, on the back of a 14.8% and 12.1% drop in 4M’13 VAT revenues and consumption taxes. it is noteworthy that revenues from consumption taxes rebounded for second consecutive month in April by 3.2%, following a 9.6% increase in March, yet their y-t-d performance is negatively affected by the weak figures recorded in the first two months of the year.

It is noteworthy that tax refunds dropped 65.2% y-o-y to €325m, €544m below 4-month target, resulting in net revenues at €14,003m down 4.4% y-o-y, yet slightly (0.8%) above target more than offsetting revenue (excl. tax refunds) shortfall.

On the contrary, primary expenditure retained its negative trend for second month in a row in April dropping by 16.0% y-o-y, following a 12.7% decrease in March and a marginal rise of 0.4% in February, bringing 4-month figure down 12.3% y-o-y to €14,651m beating target by 9.0% or €1.45bn. The bulk of cost cutting is mainly attributed to lower expenditure for salaries and pensions (down 17.0% in April and 8.3% in 4M’13) and grants to social security sector (down 23.6% in April and 22.6% in 4M’13).

Interest payments fell sharply by 71.4% y-o-y to €2,120m in 4M’13 spot on target. Note that 4M’12 – and particularly March ’12 – figure was exceptionally high and incorporated one-off payments related to PSI. Overall, total expenditure stood at €17,332m down 28.8% y-o-y bettering 4-month target by 8.5% or €1,615m.

Public Investment Budget (PIB) revenues rose 15.0% y-o-y to €1,715m (€655m or 62% above target), while PIB expenditure dropped 12.6% y-o-y to €836m (€914m or 52% below target). Overall, PIB exhibited a surplus of €879m in 4M’13 up 64% from last year’s €535m. It is also noteworthy that excluding PIB, 4M’13 budget deficit would have reached €3,329m, from €9,683m last year, implying a drop of 65.6%.

Overall, 4-month budget balance recorded a deficit of €2,449m, down 73.2% from last year’s figure of €9,149m (which included one-off payments related to PSI), significantly beating target by 57% or €3.3bn, with April exhibiting a deficit of €1,095m from €565m in March and €966m in February. Furthermore, reported 4-month figure is equivalent to 29.0% (or 3.5/12) of the FY’13 target of €8,444m.

Primary balance showed a deficit of €330m, down 81% from last year’s €1,729m, substantially outperforming 4-month target calling for a primary deficit of €3,613m by 91% or €3.28bn, with April recording a deficit of €850m from small surplus of €33m in March and €72m in February.

It is pointed out that 4M’13 bottom-line outperformance is attributed to lower expenditure (€1.62bn) and higher PIB surplus (€1.57bn) and – to a lesser extent – smaller tax refunds (€0.54bn) more than offsetting the shortfall in revenues (excl. tax refunds) of €0.47bn. Furthermore, the further widening of fiscal outperformance by €0.5bn m-o-m to €3.3bn in 4M’13 from >€2.8bn in 3M’13 provides a safety cushion for the fiscal adjustment efforts in the remaining of the year.