Budget deficit worsens to €4,845 million by April

  • ECO News
  • 26 May 2021

The budget balance stood at €4,845 million up to April, a period marked by the lockdown easing plan, according to the Ministry of Finance.

The general government recorded a €4,845 million deficit in public accounts by April 2021, a period marked by the country’s second lockdown. This figure represents an increase of €3,148 million compared to the same period last year. The figures were released by the Ministry of Finance this Wednesday.

“Until April, the Public Administration recorded a €4,845 million deficit in public accounts, reflecting a worsening of €3,148 million compared to the same period in the previous year, explained by the impact of the lockdown and the response to the pandemic, including the extraordinary support measures aimed at families and businesses,” said the statement published by the Ministry.

The increase in the deficit from €1,697 million, between January and April 2020, to €4,845 million, between January and April 2021, reflects the contraction in public revenue of 6.3% and the increase in primary expenditure of 6%.

This negative performance of public finances was already expected given that the country faced a third wave at the beginning of the year and a restrictive lockdown was decreed. So much so that the government revised upwards the target for this year’s budget deficit, on a national accounts basis, from 4.3% of GDP in the State Budget for 2021 (in October 2020) to 4.5% of GDP in the Stability Programme (in April 2021). This represents a decrease from the 5.7% of GDP recorded in 2020.

Up to March of this year, the deficit was €2,255 million, and April alone represented a deterioration of more than double. It should be noted that the impact on public expenditure is almost immediate, while there is a time delay in terms of revenue, given that the delivery of various taxes to the tax authorities does not occur in the month in which they are generated.