Papakostantinou's complete failure

The state of public finances is shocking as indicated after the initial information of a shortfall of 600 million is disproved by evidence of a 1-billion deficit.

According to the official announcement of the Ministry of Finance on details about the enforcement of the State Budget for January-February of 2011, on a budgetary basis there is a deficit of 1028 million euro, as compared to 944 million for the corresponding period of 2010!

In particular, the net proceeds of the regular budget amounted to 7943 million and dropped by 9.2% due to the non-resumption of road tax revenues by 393 million during January, since this year there was no extension for the payment of fees. It was also due to reduced revenues from the special levy on profitable businesses by 99 million, but also to a reduction on tax withholding from personal income in the current two months.

It makes sense to have a shortfall in tax revenues since the imposition of tax on… anything that transpires in Greece in conjunction with wage cuts, virtually drying the economy up.

The regular budget costs are up by 3.3%. This increase is due to the 351-million-euro grant for debt payments of hospitals, while primary expenditures dropped by 0.1% and interests by 1.3%. The regular budget expenditures remain lower than the monthly budget estimates by 300 million .

Last but not least, the Public Investment Program revenues have increased by 356.4% and costs have been cut by 67.9%.

The ministry states that these figures relate only to the performance of the State Budget and not the whole of the financial data on the government’s deficit – as defined in ESA95- which is the criterion for the evaluation of the Greek Programme for Economic Affairs.

At the same time, according to statements by the head of the PDMA (Public Debt Management Agency), Mr. Peter Christodoulou, the Agency will proceed with the scheduled March 15 auction of three-month Treasury bills.

Obviously, the Treasury chose to await the outcome of the summit of March 25th and not risk an outlet to markets with the 10-year bond spread “stuck” over the 950 units mark.