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Greece’s budget deficit for 2012 is already €1bn bigger than expected

Greece expected its income for January to be 8.9 per cent higher than last year. It actually fell… by 7 per cent.

Greece's finance minister Evangelos Venizelos: Greece's budget deficit for January was €1 billion larger than anticipated, and is likely to get worse.
Greece's finance minister Evangelos Venizelos: Greece's budget deficit for January was €1 billion larger than anticipated, and is likely to get worse.
Image: Dimitri Messinis/AP

THE GREEK GOVERNMENT has announced that its income for the first month of the year was €1 billion lower than expected.

Greek news site Ekathimerini reports that data published by the Ministry of Finance this morning showed that the government’s revenues for January were down by 7 per cent on the same period last year.

That contrasts with Budget projections which had anticipated an 8.9 per cent increase on last year’s income – leaving a gap of €1 billion more than the budget had expected.

The Budget, presented by the cabinet of technocrat prime minister Lucas Papademos in November, had actually projected a surplus for the year – but that achievement now seems particularly unlikely.

A breakdown of government revenue showed that VAT receives were down by 18.7 per cent from last year – firmly indicating that the country’s ongoing financial crisis is having a drastic effect on spending by the public.

That spending power is likely to wane even further, with the parliament having ratified a severe new austerity deal on Sunday which cuts the country’s minimum wage by a fifth.

The figures meant the hypothetical cost of borrowing for Greece – which is not borrowing on open markets because of its EU-IMF arrangements – surged to yet another record high.

If Greece was borrowing from the open markets, it would pay an annual interest rate of 207.4 per cent – while Germany, the eurozone’s benchmark economy, would pay less than 0.25 per cent.

Read: Stocks rise on news of Greek parliament’s approval of austerity measures

More: Greece cannot become a ‘bottomless pit’ – Germany

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Gavan Reilly

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