Greece says higher tax take shows it is on track to meet bailout targets

Greek tax revenues exceeded expectations in October, helping the country stay on track to meet its 2013 fiscal target, the government said today.

In what may strengthen Athens’ hand in protracted bailout negotiations with its international lenders, the central government posted a primary budget surplus - before interest payments and one-off revenues - of €1.1 billion.

Deputy finance minister Christos Staikouras told reporters tax revenue in the period was €250 million ahead of target, showing that households and business are coping with record unemployment and a wave of corporate bankruptcies in the sixth year of an austerity-fuelled recession.

This means that Athens was on course to hit its 2013 fiscal targets and fulfill conditions to seek additional debt relief from its international lenders, Staikouras said.

"At a huge sacrifice to Greek citizens, unprecedented in post-war Europe, it seems that the country is succeeding its goal," Mr Staikouras said.

A €345 million primary surplus target at general government level, which also includes the budgets of social security administrations and local government, was “feasible”, Mr Staikouras said.

Greece has a long history of questionable reporting of data, but it is now under close scrutiny from its lenders, the so-called troika of the International Monetary Fund, European Commission and European Central Bank.

Today’s reading may help Athens in negotiations with the troika, which questions its promise that it will hit its 2014 targets without resort to new, unpopular savings.

“The country strengthens its negotiating position,” Mr Staikouras said.

Under the terms of its bailout, Greece’s primary budget must be balanced this year and have a surplus of €2.751 billion, or 1.5 per cent of GDP, in 2014.

But lenders believe that Athens will miss the 2014 target by about 2 billion euros, due to social spending overruns and possible tax revenue shortfalls.

Athens disagrees, saying that expected economic recovery and better tax collection will help it hit its targets.

The government has also been spending far less on public investment than it initially planned to fix its finances this year.

Greece is due to receive up to €5.9 billion of EU/IMF lifeline loans by the end of the year, according to a current disbursement schedule.

The two sides are not in a hurry to conclude a deal since the country has no pressing funding needs. (Reuters)