Reduced revenues in budget implementation by May

A decrease in revenues and a slight increase in expenditure was observed, according to data on the implementation of the state budget in the first five months of 2024.

According to a report by the Treasury of the Republic, the implementation of the total state budget for the period from January 1 to May 31 stood at 28%, compared to the average of 31% over the last decade and 29% in the same period in 2023. It is noted that the higher implementation rate for the years 2020-2021 was mainly due to the seasonality of public debt repayment.

There was a significant decrease in revenues, which was mainly attributed to the decrease in inflows from the European Medium-Term Bond (EMTN) issue, which had a significant impact on revenues in 2023.

Total revenue up to the end of May 2024 amounted to €3.33 billion, representing 30% of the budgeted amount for the year. This is down from the €4.10 billion (42%) received in the same period in 2023.

In terms of revenue, Indirect Taxes increased by €0.07 billion (4%) compared to 2023, mainly due to an increase of €0.03 billion (2024: €1.23 billion, 2023: €1.20 billion) in VAT revenue. Direct Taxes increased by €0.19 billion (18%) compared to 2023, mainly due to an increase in Corporate and Personal Income Tax (2024: €1.07 billion, 2023: €0.87 billion). By the end of May, loans amounted to €0.03 billion (2023: €1.0 billion).

Correspondingly, actual government spending for the same period in 2024 amounted to €3.69 billion.

In terms of expenditure, salaries, pensions and allowances increased by 6%, from €1.20 billion in 2023 to €1.27 billion in 2024. Repayment of loans and interest reached €0.53 billion, up from €0.44 billion in 2023. Social benefits increased by €0.08 billion to €0.76 billion, with the increase being driven by increased social welfare and health benefits. Transfers and grants increased by €0.02 billion, reaching €0.64 billion, due to an increase in the General Government Contribution to the Social Security Fund. There was a 14% decrease in operating and other expenditure, with expenditure reaching €0.32 billion, down from €0.37 billion in 2023.

It is further noted that the overall budget for 2024 shows a 16% increase in revenues, reaching €11.28 billion, compared to €9.77 billion in 2023. Expenditure is expected to increase by 9%, from €12 billion in 2023 to €13.1 billion in 2024.

The budgeted increase in revenues is mainly due to an increase in indirect and direct taxes of €0.68 billion and €0.61 billion respectively. The budgeted increase in expenditure is mainly due to an increase in loan and interest repayments and payroll, pensions and allowances by €0.77 billion and €0.35 billion respectively.

Slightly higher implementation of development expenditure

There was an increase in the implementation of the state budget until May 2024 as regards development expenditure.

According to the available data, over the last decade, the average implementation of the state budget for development expenditure up to May was at 16%, while the implementation rate for 2024 is 18%. The corresponding rate for 2023 was 17%.

Development expenditure includes capital expenditure, co-financing and other financing, grants, contributions and subsidies, social benefits, and other expenditure.

According to the report, capital expenditure accounts for 41%, co-financing and other financing for 25%, grants, contributions and subsidies for 17%, social benefits for 10%, and other expenditure for 7%.

In the corresponding period in 2023, capital expenditure accounted for 36%, co-financing and other financing for 26%, grants, contributions and subsidies for 24%, social benefits for 10%, and other expenditure for 4%.

(Source: CNA)