The Malta Independent 18 April 2024, Thursday
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Beleaugured Greek government suffers collapse in revenue in May

Thursday, 18 June 2015, 17:29 Last update: about 10 years ago

The Greek government suffered a collapse in revenue in May after companies and individuals delayed filing tax returns amid fears that emergency levies were imminent in order to secure a deal with bailout creditors. 

The news of the sharp drop in receipts comes as eurozone finance ministers held a crunch meeting to discuss the country's bailout.

As eurozone finance ministers gathered in Luxembourg, leaders appeared as deadlocked as ever and officials continued to minimise the chance of a breakthrough, raising the likelihood of a sovereign debt default.

Unless Greece agrees economic reforms with its creditors by the weekend, EU officials believe time will run out for Athens to access a much-needed €7.2bn tranche remaining in its bailout programme before it expires in two weeks.

Without the funds, the government will probably be unable to repay a €1.6bn loan from the International Monetary Fund, a scenario the country's central bank has warned would trigger a "painful course" leading to exit from the eurozone and "most likely" from the EU.

Greek government revenues in May were €900m, or 24 per cent, short of the monthly target, according to preliminary budget figures. It had met projections for the previous three months.

But Greece still ran a primary budget surplus - before making payments on the public debt - amounting to €1.5bn for the first five months after slashing payments to suppliers and outlays for public investment.

"There appears to be a complete freeze on domestic payments apart from wages and pensions as the government rounds up cash to pay international creditors," a senior Athens banker said. "This is starting to have a knock-on effect on revenue collection."

A government spokesman on Wednesday denied reports Greece was considering imposing capital controls, perhaps as early as next week.

Cash withdrawals from local banks have picked up pace, with almost €2bn pulled out in the past three days, the same banker said.

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