http://hat4uk.wordpress.com/2012/05/25/greece-breaking-athens-caretaker-government-forced-to-raid-recapitalisation-budget-to-keep-going-34/
The Slog has learned that Greece’s Accounting Office produced an internal briefing paper this week warning that tax revenues are likely to miss hoped-for targets by some €1.35 billion. While some of what follows has been reported in the newspaper Kathimerini, the real rate of decline in tax receipts has been understated.
http://theprodigalgreek.wordpress.com/2012/05/23/a-budget-full-of-holes/
State Budget Execution, Revenues, Property and Transaction Taxes
GREECE BREAKING: Athens caretaker government forced to raid recapitalisation budget to keep going
The Slog has learned that Greece’s Accounting Office produced an internal briefing paper this week warning that tax revenues are likely to miss hoped-for targets by some €1.35 billion. While some of what follows has been reported in the newspaper Kathimerini, the real rate of decline in tax receipts has been understated.
The decline in tax receipts has taken off exponentially since the ‘victory’ for the anti-Brussels Accord Parties. A proportion of Greek taxpayers – estimated at a staggering 27% – has been withholding all tax payments in the hope that such demands might be withdrawn under a future anti-bailout Government.These and other equally horrific realities were laid before a meeting led by Finance Minister Giorgos Zannias yesterday (Thursday) at the State General Accounting Office, when it was made clear to attendees that given the delay in the collection of tax revenues – and the possible extension to the deadline for the submission of tax statements by at least 15 days, the use of the HFSF funds would seem now to be “imperative”.
This is what happens when politicians kick cans down the road – in order to clear their immediate road to re-election.
The new information I’ve received also helps to explain massive bank withdrawals in Greece, in that Finance Minister Giorgos Zannias two weeks ago broadcast to say those suspected of owing the most taxes would have the money taken from their bank without prior warning. Hence the desire to withdraw funds. It should not be imagined that only your average superstitious peasant is withdrawing deposits: I’m told with a degree of certainty that most of the funds belong to the richer sectors of Athenian society. “Quite a bit of it is propping up the London property market,” said one source.
Thus the Greek Finance Ministry is on the verge of raiding funds that the Hellenic Financial Stability Facility (HFSF) has at its disposal, in order to secure desperately needed cash for the state’s acute cash-flow problem. (Slogposts recently have focused on the inability of hospitals to reimburse pharmacies). The HFSF contains roughly €3 billion earmarked for recapitalisation of the country’s credit system, but the State does have the authority to use it under extreme duress to cover its own obligations.
Does this change the opinion expressed by The Slog earlier today that Germany will leave the eurozone before Greece does? On the contrary, it confirms my view: while Greece is dependent (in the worst sense) on intravenous money at the moment – and convinced that it cannot survive without it – Berlin knows perfectly well that this situation is only going to get increasingly expensive: and in the older biblical sense, it would far rather be without it.
ND starts campaign, wants cuts suspended
New Democracy leader Antonis Samaras is due to deliver his first speech of the new election campaign on Saturday, with the conservatives advocating that more than 11 billion euros of savings due to be agreed with Greece’s lenders this summer be suspended.
Samaras is expected to step up his attack on leftist SYRIZA, with whom his party is vying for top spot in the June 17 elections. A Public Issue opinion poll published on Thursday put SYRIZA ahead on 30 percent and ND trailing in second place on 26 percent. PASOK was third with 15.5 percent. However, two surveys published on Friday showed the gap between the two parties to be even narrower.
A poll by VPRC indicated that support for SYRIZA is running at 28.5 percent, while ND garners 26 percent, with PASOK on 12.5. The Metron Analysis survey suggested that SYRIZA had the support of 27.2 percent of the electorate, ND 27 percent and PASOK 14.8.
New Democracy has sought to broaden its appeal since the May 6 polls in the hope of remaining in first place next month and securing the 50-seat bonus for the leading party. Four more members of the collapsing Popular Orthodox Rally (LAOS) joined ND on Friday. One member of the right-wing Independent Greeks also migrated to the conservatives.
Samaras is also expected to set out on Saturday what changes he believes can be made to the terms of Greece’s EU-IMF loan deal following talks with European officials this week. The party’s vice president, Dimitris Avramopoulos, suggested that some 11.5 billion euros of measures for 2013 and 2014 should be frozen, pending further negotiations.
“The Europeans comprehend that something is going on at the moment in Greece and they have to handle this reality differently because they do not want the crisis to spread and threaten Europe,” he told Skai TV.
and....
Athens left to its own fiscal devices
Berlin suggests that the next tranche of bailout money will not have to come in June 
Berlin signaled on Friday that the eurozone is unlikely to send the next tranche of bailout money to Greece before the political landscape becomes clearer in Athens, especially in terms of the application of measures agreed with the country’s international creditors. At the same time the caretaker government is putting into action plans to bolster the collection of tax revenues. “As far as I am aware, there is no current need for external financing up until beyond the first half of the year,” German Finance Ministry spokesman Martin Kotthaus told a press conference in Berlin, adding that a delay of a few weeks would be “unproblematic.” The next Greek bond to mature is payable on August 20 to the European Central Bank and amounts to 3.1 billion euros. It seems, however, that the eurozone has closely examined the Greek state’s cash flow and ensured that it will have enough funds to manage without the June installment -- the eurozone was scheduled to lend Greece 2.6 billion euros. Reports yesterday suggested revenues in May are lagging by 20 to 30 percent, which, factoring in the likely delay of the June tranche, means the Finance Ministry must urgently find extra public revenues as soon as possible. Minister Giorgos Zannias called an extraordinary meeting on Friday with his general secretaries and decided to adopt three measures to boost revenues. These are an increase in checks to identify corporations and self-employed people who do not pay value-added tax, the delivery of notices for the payment of overdue debts to the state, and the issue of guidelines for working groups monitoring taxpayers with sizable wealth and real estate. On Monday Zannias will begin a round of meetings with the heads of the country’s biggest tax offices, which together cash in about 80 percent of revenues, in a bid to draft a plan for a revenues rebound.
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http://theprodigalgreek.wordpress.com/2012/05/23/a-budget-full-of-holes/
The Prodigal Greek
The Greek crisis through a different prism
A budget full of holes
with 2 comments
Yesterday, the Greek government announced the budget execution to April. The headline numbers are looking promising, with the budget deficit at 1.7bln, well below the target of 3.3bln and almost cut in half from the same period last year when the deficit stood at 3.6bln.
However, when one goes past the headline, the budget execution is particularly problematic and the new government that, hopefully, will be formed after the June 17 elections will face serious challenges keeping it on track.
Victim to the ever deepening recession, the state revenues continue their downward trend, already 495mln below the target, and it is only because of a tight control over primary expenditures and public investment spending that the deficit is below the target to date.
State Budget Execution, Primary and Public Investment Expenditure
On the revenue side, recurring revenues are down by 233mln, with direct taxation beating the target primarily as a result of the property tax levied through the electricity bills which brought in 486mln more than targeted. On the other hand, the death spiral of the Greek economy economy is reflected in transaction taxes and in particular VAT that is off target by 418mln as a result of significantly lower consumption and overall turnover in the economy, combined with the inability of small and medium size firms to return the VAT in the absence of liquidity.
State Budget Execution, Revenues, Property and Transaction Taxes
Even more alarming, looking on the expenditure side, the social security sector has already used approximately half of the budget grants. OGA and IKA, that need annually from the state budget 7.3bln, have already used 3.7bln. In this rate, the majority of social security funds will need further state budget assistance before the end of the summer.
At the same time, pharmacists across the country are going today on a 24 hour strike and cut credit due to 700bln arrears from the state and social security funds. No credit means that citizens and pensioners will need to pay for the medication of ALL treatments upfront, in cash, and then claim the expense from their cash strapped social security funds in hope of refund. The same citizens and pensioners that have seen their disposable income reduced minimum by a quarter.
Social Security Sector Grants
In this fiscal picture, Greece’s politicians chose to take the country into a repeat election and from certain corners of the political spectrum we hear about magical solutions of an independent and proud Greece that can play hard ball in defiance.
The numbers are saying the brutal truth. Everyone in the political scene better quickly face the reality because they risk having the country blow up in their hands.
