Fiscal deficit in 2011 is expected to be 0.7% GDP lower than budgeted

The headline fiscal deficit is estimated at 4.8% of GDP in 2011. However, the number is a “victim” of some artificial methodology, namely the inclusion of older debts and well as a formal positive boost from VAT paid by the government concerning a large PPP project. Indeed, adjusted for these one-offs, the real deficit figure is 4.2% of GDP compared to a budget assumption of 4.9% of GDP, i.e. an improvement of 0.7% of GDP. Lower than expected financing of EU funds (0.4% of GDP), higher non-tax revenues from dividends and one-offs (0.4% of GDP) were pushing the deficit lower. They were partly offset by continuing inefficiencies in railways and hospitals (-0.5% of GDP). 2011 fiscal figure represents an annual fiscal tightening as large as 4% of GDP and a consolidation effort of 3.4% of GDP. The government sticks to its target of the deficit up to 4.6% of GDP in 2012.