Interest sinks an almost balanced budget!

There are elections during the most critical juncture for the state of public finances.

The General Government data for the quarter of January-April 2012 shows that right before the elections, the primary public deficit was only 18 million compared to 1.48 billion in the corresponding period last year.

Meanwhile, there was no time to show any positive effects of the “haircut” of Greek bonds. So interest payments “sank” the total budget and the deficit jumped to 7.6 billion, compared to 5.47 billion during the first quarter of 2011! Total interest expenditure until April totaled 7.4 billion, almost double to that of the first quarter last year.

With this data, the public sector (at least until the elections) “has been holding its breath”. Thus, the other expenses (operating and wage expenses) fell significantly, while revenue for the state budget marginally increased, from 15.1 billion to 16.1 billion.

This improved picture is mainly localized in the narrow public sector and is attributed largely to major spending cuts and the levying of property tax through the PPC.

In the wider public sector the situation is still difficult. The OTA surplus was reduced further while most legal persons are about to “pop” due to deficits and no longer have the “backing” of central government.

The remarkable thing is that despite recession, wage cuts and unemployment, insurance funds showed a surplus of 2.91 million euros, against a deficit of 2.75 million last year.

The fragile balance was achieved with a generalized “halting of payments” in the public sector. At the end of April, outstanding obligations of the State to individuals reached 6.28 billion from 6.24 billion in March 2012. After the elections, there are fears that the amount will increase much more.

Insurance funds remained debt champions until April, with 2.82 billion euros, while they are followed by hospitals with 1.59 billion euros' worth of debts and legal entities, who owe 2.66 million euros. Ministres appear to owe 805 million euros, of which 164 are investment costs.

It is clarified, however, that the government deficit as calculated by the Troika was not captured by this data, without making the first fiscal adjustments on a national basis and subtracting income or expenditure incurred in previous years.