The state budget deficit for first eight months of the year (January- August 2010) was reduced by 32,3pc compared to the same period in 2009, against a targeted 26.5pc reduction for the period. (39,5pc targeted annual decline) According to data available for the state budget execution for the eight months of 2010 (January – August 2010), on a fiscal basis, the deficit was reduced to 14.485 million euro compared to 21.382 million euro during the same period in 2009. The deficit reduction is characterized by the accumulation of interest payments in July and August 2010, which make up 40pc of yearly interest payment- as well as by a lag in revenues. In particular, net revenues of the ordinary budget increased by 3,4pc in reference to the same period of the previous year, against a targeted 13,7pc annual increase. This development has been achieved prior to the full attribution of the fiscal measures introduced, such as the increase of VAT by two (2) percentage points, applicable since July 1st 2010. Ordinary budget expenditures during the same time period declined by 7,6pc year-over-year against a targeted 5,5pc annual decrease. In particular, primary expenditures decreased by 12,1pc against an annual target of a 5,8pc annual decline and interest expenditures increased by 6,6pc against a projected 5,6pc annual increase. The decrease of primary expenditures is mainly due to the restriction of expenditure in health and social security (lower grants to the Social Security Funds by 1.406 million euro compared to the respective period of 2009), a 1.008 million euro reduction in operational and other expenditures and reduced expenditure for salaries and pensions (decreased by 1.041 million euro). Public Investment Budget (PIB) expenditures declined by 32,8pc and PIB revenues by 2,7pc, compared to the same period in 2009.