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Jan-Aug deficit at 2%

30/09/2013 06:51
Fiscal balance continues to show significant improvement despite lower revenue inflow.

According to Finance Ministry data, the first eight months of 2013 recorded a deficit of €336.4 million or 2.05% of GDP against a deficit of €541.4 million or 3.03% of GDP last year.

The figures create expectations to the government for an achievement of the budgetary targets of the Memorandum and raise concerns on the course of revenue, as the usually “full” August – due to the corporate tax revenues – brought to the surface the difficulties that actually exist.

Government revenue for the period declined 0.3% or €13,4 million to €4061,9 million from €4075,3 million. By July, they recorded an increase of 0.92%.

Tax revenues fell €172,4 million; €128,7 million emerged from indirect taxes and €83,9 million from Social Securities Fund contributions.

Revenues from direct taxes increased by €40,3 million.

VAT revenues are down €62,8 million and revenue from duty dropped €3,5 million.

On the other hand, an increase of €158,9 million was recorded in non-tax revenue from the CB and the licensing of EEZ.
Public spending declined in the first eight months of 2013 to €243,2 million or 5.2% to €4418,9 million from €4662,1 million in the corresponding period last year. In the first seven months of the year, the reduction amounted to 6%.

A decrease of €119,8 million is recorded in current transfers while wages and salaries fell €74,9 million or 6.3% to €1117,4 million from € 1192,3 million.

A decline of €26,7 million is observed in the costs of servicing debt while the costs for the purchase of goods and services decreased by € 22,7.

An increase €32,4 million was recorded in SSF payments to €974,5 million from €942,1 million.

The primary surplus – the surplus excluding debt servicing costs - amounted to €103,8 million from a deficit of €74,4 million last year.

According to the memorandum, Cyprus will have to achieve primary general government deficit not exceeding €395 million (2.4% of GDP) in 2013.

The budgetary data is expected to worsen in the next four months due to the compensation for the provident funds deposited in the Cyprus Popular Bank.