Greek budget gap widens but beats revised target

A deeper-than-expected recession caused Greece's central government deficit to widen by a quarter in the first seven months of the year, the finance ministry said on Wednesday.
But the deficit was less than a new, revised target under the country's 2011-2015 fiscal plan, the finance ministry said.
In the January-July period, the central government budget gap widened by 25% to 15.51 bln euros. But it stood below a revised, interim target of 16.48 bln euros for the period.
The ministry did not say what the previous target was.
Budget slippages amid the recession prompted the government to pass even harsher austerity measures in June in a bid to qualify for further EU/IMF rescue payments.
"The current revenue shortfall is expected to be tackled during the next months, based on the anticipated performance of tax regulations included in the … medium-term financial strategy 2011-2015," the ministry said.
The ministry attributed the revenue shortfall to a more severe economic slump than had been forecast. The recession also caused spending on social security payments to rise more than anticipated, it added.
The Greek economy contracted at an annual pace of 5.5% in the first quarter, hurt by austerity. Second quarter figures are due on Friday.
In January-July, net budget revenues dropped 6.4% year-on-year to 26.85 bln euros. Primary spending, excluding interest payments on the country's debt, increased by 4.7% to 30.13 bln euros.
In order to curb outlays, the government kept sharply cutting public investment, down 38% year-on-year.
Greece has maintained unchanged its central government deficit target for the full year, at 19.8 bln euros. But the mix between revenues and spending has changed.
The net revenue target for the full year was lowered by 2.7% to 54.04 bln euros. The full-year target for primary spending was also lowered, by 1.2% to 52 bln euros.
The budget data refer to the state budget deficit which excludes local authorities and social security spending and does not coincide with the general government shortfall — the benchmark for the EU's assessment of Greece's fiscal progress.