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Fiscal balance remains positive

30/09/2015 06:15
The fiscal balance of the general government remained positive as at the end of August, according to new Cystat figures, despite a mild deterioration of revenues and expenditure growth.

The fiscal surplus for the general government in the first eight months of 2015 amounted to €118,8 mn or 0,72% of GDP against a surplus of €141,5 mn or 0,8% of GDP last year.

In the first seven months of 2015 fiscal surplus amounted to €38,5 mn.

Central government revenues

The total public revenues fell by 2,22% or €94,8 mn in the first eight months of the year to €4.172,8 mn from €4.267,6 mn in the same period of 2014. The decline is partly attributable to the lower dividend granted by the Central Bank this year, as it stood at €133 mn from €189 mn last year.

Direct taxes fell by €60,9 mn despite the increase in income tax by €28,7 mn as other direct taxes declined by €89,6 mn.

Indirect taxes increased by €46,4 mn mainly due to higher VAT proceeds while social security contributions were up by €29,3 mn.

As a result tax revenue was up by €14,8 mn.

Non-tax revenues decreased by €75,9 mn mainly due to the lower central bank dividend, bringing the total revenues to €4,124 bn, €61,1 mn less than in Jan-Aug 2014.

Due to a decline of €33,6 mn in grants the total change in overall revenues of the central government reached -€94,8 mn.

Central government spending

The Cystat data show an increase in public spending mostly due to current transfers.

Public spending increased by 1.1% or €44,8 mn to €3.161 mn from €4.116 mn last year.

The largest increase of 10,3% or €89,2 mn was registered in current transfers reaching €952 mn from €863 mn.

On the contrary, the biggest decreases were evidenced in social security payments and wages and salaries as they declined by €37,1 mn and €20,7 mn respectively.

The costs of debt service fell by €2,7 mn to €353,4 mn.

As a result, the primary surplus – the surplus without the cost of debt service - of the central government reached €365 mn compared to €507 mn in the eight months of 2014 while the overall balance stood at €12 mn compared to €151 mn.

General government

Despite the drop in revenues and increase in spending, the overall balance was improved by a surplus from local authorities and semi-public entities as well as from technical adjustments.

There was a surplus of €26,6 mn from local authorities and semi-public entities compared to a deficit of €37,7 in 2014.

Cash flow adjustments as per the EU methodology reached €80,6 mn compared to €28 mn in the same period of the previous year. The figures given do not explain the adjustments made.

The resulting balance of the general government reached €118,8 mn compared to €141,5 mn in 2014.

According to the objectives of the updated memorandum, the primary surplus should reach €334 mn or 1,9% of GDP in 2015 while the general balance is to be -€156 mn or -0,9% of GDP.