Greece beats Jan-July budget target, helped by EU funds

12/8/2013

By Lefteris Papadimas and Harry Papachristou

(Reuters) - Greece easily beat its fiscal targets in the first seven months of the year, propped up by aid from euro zone central banks and European Union funds, finance ministry figures showed on Monday.

The central government had a primary budget surplus - before interest payments - of 2.57 billion euros (2.2 billion pounds). That compares with an interim target for a deficit of 3.14 billion euros, it said.

The budget excludes the finances of local authorities and social security organisations.

But about half of that 5.7 billion-euro-overshoot is explained by the fact that Athens received more European Union subsidies than expected and also spent far less of them on investment projects than initially planned, the figures showed.

The figures also include about 1.5 billion euros in one-off revenue from euro zone central banks. This money derives from profits which the central banks earned from Greek government bonds they held and which they returned to Athens under the terms of its international bailout.

By contrast, gross tax revenues are about 1.5 billion euros million euros behind target, hit by a severe, six-year recession which has wiped out about a quarter of the country's economy.

At the same time, Athens cut primary spending by 10 percent to 25.1 billion euros, beating its interim target by 1.88 billion.

Athens needs to meet fiscal targets to obtain rescue loans under its EU/IMF bailout. It hopes to post a primary surplus at general government level this year, a move that would allow it to seek a further debt write-down from its lenders.

But lenders remain sceptical and expect a balanced primary budget this year. Large uncertainties about the 2013 fiscal outcome persist, they said last month, especially as Greek firms and citizens have yet to pay the bulk of this year's taxes.

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