Treasury finances in June 2002. Report date: July 25, 2002


Treasury Finances in June
Report date July 25, 2002

Figures for Treasury finances for the first six months of 2002 are now available. They are on a cash basis and therefore not comparable to the Treasury accounts or the fiscal budget, both of which are presented on an accruals basis.

According to these figures, the cash deficit from operations amounted to 7.7 billion krónur, compared to a deficit of 1.6 billion krónur by the end of June 2001. This is 4 billion krónur below estimates which is solely due to increased expenditure. The main items are increased interest expenditures due to redemption of treasury bonds before maturity, specific government measures to retain inflation related to the extension of the general wage agreements, increased healthcare expenditure, payments due to increased pension liabilities and payments into the wage guarantee fund. It should, howevr, be noted that a significant amount of the increased expenditure only affects the cash flow and will not affect the 2002 budget which is presented on an accruals basis. The net financial balance was negative by 4.3 billion krónur compared to a deficit of 3.7 billion krónur in June 2001.

Total revenue amounted to 113 billion krónur, an increase of about 5.3 billion krónur from last year or 5 per cent. Tax revenue increased somewhat less, or by 4S per cent. In comparison, general price changes amounted to 7 per cent for this period, indicating that the economy is still contracting although the contraction is receding. As evidence of this, revenue from value-added tax for the first six months increased by close to S per cent in real terms, compared with a 7 per cent fall in real terms last year.

Total expenditures amounted to 120.9 billion krónur, increasing by close to 11S billion krónur from last year or 10S per cent. The main item is a 3.7 billion krónur increase in healthcare payments. Education and cultural affairs account for 1.3 billion krónur increase, administrative costs for 1.8 billion and social security payments for 1.7 billion. Payments to economic affairs increased by 3.6 per cent where increased payments to communications outweigh a decrease in payments to agriculture. Interest expenditure increased by 950 million krónur, or 7.7 per cent from June 2001.

Foreign long-term borrowing increased by 21.6 billion krónur. In the coming months, the share of long-term debt will be increased and short-term loans will decrease. Domestic borrowing amounted to 7 billion krónur. The Treasury remitted 4.5 billion krónur to the Government Employees Pension Fund in order to lower future liabilities of the Treasury. The overall cash balance was negative by 3.4 billion krónur, compared with a 1.8 billion krónur deficit at the end of June last year.