Greece cuts investment to meet budget

Greece cut tax refunds and curbed public investments in January to offset a slide in tax revenues and meet its budget targets, the government said yesterday.

Gross tax revenues fell 241 million euros short of expectations due to falling VAT receipts in the context of the country’s crippling recession. Revenues sank 11 per cent year-on-year to 4.42 billion euros.

Hurt by the government’s austerity programme, Greek retail sales are plunging at double-digit rates, thus reducing indirect tax receipts.

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To compensate for the unexpectedly large decline, the government slashed tax refunds to 45 million euros, compared with a 311 million euro target. It also spent just 67 million euros on public investment projects, less than the interim 200 million euro target.

“The balance was positive in January but there’s no room for complacency,” Deputy Finance Minister Christos Staikouras said. “Attention and intensification of effort is required on the revenue side.”

Overall, the central government budget, which excludes spending by local authorities and social security organisations, posted a surplus of 159 million euros compared to a deficit of 490 million euros in the same month last year, according to finance ministry figures.

The primary surplus – excluding interest payments on the country’s debt – stood at 398 million euros, compared with a deficit target of 413 million euros.

Mired in recession, Greece has been struggling to meet targets set under two bailouts since 2010.