GREEK ECONOMY: State budget revenues miss target, changes in property tax

pancreta bank greek economy

Greek Economic Update:

The State budget revenues has missed is target and there are changes in property tax.

Pancreta Bank signed an in-principle agreement with HSBC Continental Europe on Monday for the purchase of HSBC branch operations in Greece.

The completion of the transaction is subject to approvals by the Bank of Greece and the Hellenic Competition Commission.

According to the terms of the agreement after the completion of the potential transaction, all assets and liabilities, human resources and the network of 15 HSBC branches in Greece are expected to be transferred to Pancreta Bank SA.

The HSBC branch network is complementary to Pancreta Bank’s presence in Athens, which is thus significantly increased.

Pancreta Bank’s Capital Adequacy Ratios are expected to be strongly enhanced post completion and further following Pancreta’s upcoming capital increase which is contemplated for the second quarter of 2022.

The potential transaction would be expected to complete in the first half of 2023.

Meanwhile, the government's bill on the new property tax (ENFIA) was tabled in parliament on Tuesday.

According to the updated bill, of the approximately 6,200,000 property owners currently paying ENFIA, an 80 pct, that is some 5mln of them, will see a distinct reduction in comparison to last year's rates.

Some 900,000 owners will see no change, while 320,000 will actually see a slight increase.

Thousands of property owners in Greece are expected to see substantial reductions in their property tax, as the government decided to axe ENFIA charges by 345mln euros, against a state budget reduction figure of 70 million euros.

This comes as Greek state budget tax revenues exceeded targets by 587 million euros in the first two months of 2022, evidence that the Greek economy was growing faster than expected before the war in Ukraine.

Alternate Finance Minister Theodore Skylakakis said on Tuesday that tax revenues totaled 8.765 billion euros in the first two months of the year, up 887 million from budget targets.

This figure included 300 million euros in proceeds from car duties (payment was extended by two months).

The Alternate minister stressed that these figures confirmed that the Greek economy was growing faster than expected in the January-February period before the war in Ukraine and offered the government room to announce more relief measures for households and enterprises hit by the energy crisis.

The general government budget recorded a deficit of 903 million euros in the January-February period, down from a budget target for a shortfall of 2.004 billion and a deficit of 3.268 billion euros in the same period in 2021.

The primary result showed a surplus of 847 million euros from a budget target for a deficit of 239 million and a primary deficit of 1.497 billion euros in the same period in 2021.

State budget revenues were 8.860 billion euros, down 10.9% from targets (figures included the collection of the first installment from the Recovery Fund worth 1.718 billion euros). Regular budget revenue was 9.503 billion euros, down 10.6% from targets.

Tax revenue was 8.765 billion euros, up 11.3% from targets, while tax returns totaled 642 million euros, down 40 million from targets and Public Investment Programme revenue was 427 million euros, down 213 million from targets.

Budget spending totaled 9.763 billion euros in the January-February period, down 2.185 billion from targets, while regular budget spending was down 2.580 billion euros from targets. Budget spending was down 2.038 billion euros compared with the same period in 2021.

In February, net revenue was 5.005 billion euros, down 473 million from monthly targets, while regular budget revenue was 5.416 billion, down 460 million from targets.

Tax revenue was 4.933 billion euros, down 31% from targets, while tax returns totaled 411 million, up 13 million from monthly targets. Public Investment Programme revenue was 359 million euros in February, up 144 million from monthly targets.

Elsewhere, Eurogroup welcomed Greece's progress, recognising its rapid and strong recovery, but also the favorable prospects of its economy, said Greek Finance Minister Christos Staikouras in a statement on Monday.

He was speaking after Eurogroup's 13th evaluation of the report of enhanced supervision.

"Today's meeting included an agenda of difficult issues, as a result of the unprecedented challenges and the intense instability, uncertainty and insecurity created by recent geopolitical developments," he noted.

"In this fluid environment," he stressed, "Greece registered yet another success."

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