Recession+Taxes+Unemployment+Interest=3.5bn "black hole"

The “black hole” in the budget increases more and more. The elements of the state budget show that despite measures and the hike, the deviation from the objectives of containing the deficit is increasing rather than decreasing in the 11 months of 2011 and is now reaching 3.5 bn!

Even before the ink is dry on the new 2012 budget, the assumptions for 2011 are off. Data shows that the excess expenditure is fast approaching 1.5bn as spending is increased by 6.2% instead of 3.8%, which is the budget’s goal. 1.9bn is missing from public revenue as of December 7.5 bn (instead of 5.5bn last year) must be collected, in order to achieve the “lowered” goal of increasing by 0.9% for 2010.

Within December, the state must collect 10.2bn in order to meet its revenue-raising target of 54bn set for this year’s Memorandum. As it all demonstrates, if the situation is not heeded, the revenue this year will not exceed 51.3 bn and expenditures will lie at 69.5bn. Thus, the deficit this year will reach 21.7bn and will exceed in absolute numbers,that of 2010, which was 21.45bn.

At the same time, costs have soared by 3.1% over the last 11 months against a target reduction of 3%. Now in December they should not exceed 6.5 billion, but this seems impossible because the pension funds 'draw' more and more money to help pay pensions.

Where does the money go?

The cost of the regular budget has increased by 3,657 million or 3.0% over 2010. The increase was primarily due to:

- The increased interest expense by 2.638 billion or 20.4% as compared to the same period in 2010,

- The increase in primary spending by 3.0% or 1.339 billion euros compared with the corresponding period of 2010 due to increased costs in insurance, healthcare and the unemployment benefits of OAED

Main beneficiaries of the increased grants were:

- Insurance Funds at 1.611 billion (mainly IKA with1, 583 billion, OAEE with 100 million and NAT with 42 mn.) due to lower revenue from insurance contributions.

- Hospitals at 1.059 billion to pay for health supplies in the year 2011 (also given 89 million Euros for the payment of debts from previous years' fees).

In fact, the constant and deep recession continues to feed the deficit  by reducing revenues and increasing costs. For this reason, Evangelos Venizelos insisted yesterday that "there is not enough capacity to pay, the tax collection mechanism is not sufficient, there should be a willingness to comply by the citizens, there must be an economic object, there must be economic activity and the market must be able to move. And this is the great difficulty, this is the truth before which we stand and that truth has been discussed with the Prime Minister, who responded to a relevant question in Brussels”