The state budget deficit amounted to EUR 1.2 billion in the first eight months of this year. Revenue and expenditure growth stood at around 11%. Revenue growth strengthened considerably compared with the same period last year, even when excluding the effect of the accelerated absorption of funds under the Recovery and Resilience Plan (RRP). This strengthening was primarily driven by higher tax revenues, particularly VAT, which also reflects improved macroeconomic conditions. Expenditure growth remains high and broad-based. The main driver of growth continues to be higher labour costs, which are likely to be considerably higher for the full year than projected in the budget adopted last year.
Under the current budget, the deficit is expected to amount to EUR 2.1 billion this year. The presentation of the budget revision was postponed compared with the original timetable. Based on information publicly available to date, expenditure is expected to be around EUR 750 million higher, of which approximately EUR 300 million is attributable to RRP funds, which have no impact on the balance. Based on expenditure and revenue execution to date, we estimate that tax revenues will also be higher than currently planned. An assessment of this year’s deficit will be possible following the full presentation of the budget revision and any measures to stabilise public finances.