ocp192_en

3. PROGRAMME IMPLEMENTATION3. PROGRAMME IMPLEMENTATION3.1. FISCAL DEVELOPMENTS AND POLICY OUTLOOK3.1.1. Fiscal outcome for 201317. After achieving the fiscal target in 2012, the balanced primary budget target for 2013 has beenexceeded by a significant margin, the outcome being a primary surplus of 0.8% of GDP inprogramme terms (see Table 2 and 4). The two quarterly fiscal quantitative performance criteria – thegeneral government primary modified cash balance and primary state cash expenditure – for 2013 underthe programme have been met (see Table 3 and Graphs 15, 16). Overall, taking into account the verygood result of 2013, Greece has accomplished since 2009 a remarkable improvement in its fiscalposition, especially in cyclically-adjusted terms.18. The strong fiscal result in 2013 largely reflects a better-than-expected outturn of the State budget.On the expenditure side, operational and social welfare spending recorded notable under-executioncompared with the budgeted amounts. As regards revenue, taxes turned out to be better than anticipatedon the back of the strong tourist season but also benefiting from robust collection of direct taxes. Inparticular property tax collection was strong, despite a concentration of payments towards the end of theyear. Moreover, higher-than-assumed non-tax and one-off revenue (e.g. income from the banking sectoron account of state guarantees fees) played a positive role. Finally, the authorities frontloaded theabsorption of EU structural in 2013 in the context of reactivation of the large motorway constructionproject.19. The social budget (pension, employment and health funds) also contributed slightly to the 2013fiscal over-performance. Revenues came in significantly lower than expected due to shortfalls insocial security contributions and other categories, which were only partly offset by the improvements indebt collection. However, this has been over-compensated by savings from the expenditure side, whichhowever are largely of a temporary nature. While the spending on pensions turned out to besignificantly higher than projected due to an unexpected wave of retirements, this was more than offsetby lower-than-assumed outlays on unemployment benefits and healthcare. The authorities compressedthe latter with the application of the claw-back mechanism (the mechanism that ensures a payback bymarket providers of the expenditure in excess of the specific spending ceiling) after identifyingoverruns on diagnostics and private clinics in the first half of 2013. The financial results of otherentities of the central government (extra-budgetary funds and state-owned enterprises) and localgovernments were broadly in line with expectations.20. The Authorities have allocated the 2013 fiscal over-performance. In accordance with the Eurogroupstatement of November 2012, the authorities intend to transfer some 30 percent of the over-performanceto the segregated account earmarked for debt reduction. In addition, another part of the overperformanceis expected to be used for clearing unpaid government obligations linked to the past,thereby not affecting the 2014 headline deficit.21. The implementation of the arrears clearance plan has not been completed yet. About EUR 6billion has been cleared through January 2014 compared to the target of EUR 8 billion. The remainingEUR 2 billion are expected to be paid out by Q3 2015. These delays mostly reflect limited progress tospeed up clearance by public hospitals and by the Welfare Fund of Civil Servants. In addition, notableobstacles that hinder the process still remain within EOPYY and some municipalities (more details inBox 4).21