Greece’s 2015 budget plan envisages an increase in tax revenue without any additional tax burdens to citizens, Finance Alternate Minister Christos Staikouras said. Presenting the budget, the Greek minister noted that “the plan integrates a 30 pct of reduction of an extra solidarity contribution, keeping a VAT on restaurants at 13 pct, cutting a special consumption tax on heating oil by 30 pct, lowering social contributions, significantly improving a framework of adjusting overdue tax and social security debts and supporting the incomes of uniformed workers.
Commenting on a projected 2.9 pct GDP growth rate in 2015, Staikouras said it will reflect, mostly, an expected recovery of private consumption and a further strengthening of investments and exports. He noted that positive impact will also have the implementation of investment projects using funds from the European Union, the European Investment Bank and a newly founded Greek Investment Fund, a continuing process of repaying the state’s overdue debt to the private sector and a further improvement in competitiveness and confidence in the Greek economy.
The Greek minister expects a significant improvement in liquidity condition in the economy following completion of a recapitalization plan by Greek banks and the introduction of a further loosening of monetary policy by the European Central Bank through focused and long-term refinance actions.
He noted, however, that there were high and increasing risks and uncertainties, coming mostly from an international environment, as international organizations revised lower their estimates for global growth. Staikouras said that unemployment rate was expected to fall to 22.6 pct of the workforce next year, from 24.8 pct in 2014, while employment is projected to rise by 2.6 pct as the economy recovers and due to reforms in the labor market.
Greece’s harmonized consumer price index is expected to rise by 0.3 pct in 2015, while the general government’s primary surplus is expected to reach 5.6 billion euros, or 3.0 pct of GDP. The general government’s balance is expected to be fully balanced next year, with a fiscal deficit of 0.2 pct in 2015, from 1.3 pct in 2014 and 1.6 pct in 2013. The general government’s debt is expected to ease to 317 billion euros or 171 pct of GDP in 2015, down more than six percentage points compared with 2014, reflecting a significant primary surplus, progress in a privatization program and economic growth. Spending on interest will fall by 200 million euros to 5.9 billion euros.
Staikouras said the government plans to implement an ambitious privatization program and noted that the privatization program has brought 5.4 billion euros to state coffers since 2011 with the goal of collecting around 2.5 billion euros in 2015.
State budget net revenue are expected to rise to 50.9 billion euros, up 720 million euros from 2014, with primary spending falling by 530 million euros to 41.9 billion euros, but up form a Medium-term Program targets. The Public Investment Program will reach 6.4 billion euros in 2015. Staikouras said state agencies will present a surplus of 257 million euros in 2015, pension spending will rise slightly to 23.3 billion euros and a cash result in EOPYY (the state health system) will be a negative 200 million euros. Authorities are working hard to contain pharmaceutical spending to around 2.0 billion euros in 2014 and 2015, from 2.4 billion euros in 2013, while state hospitals are expected to show a negative cash result of 42 million euros in 2014. Local authorities will present a surplus of 638 million euros, slightly down from a target of 784 million euros set by a Medium-term Program. State enterprises will improve their balance by 257 million euros in 2015, while overdue debt to the private sector are down by 50 pct to 4.8 billion euros at the end of September from 9.5 billion euros at the end of 2012.
“The country has entered a period of primary fiscal surpluses and positive growth rates. This positive development must become sustainable bringing an essential decline of unemployment and an improvement to citizens’s living standards. These results came with a high social-economic cost, particularly for households and enterprises. We must ensure that these sacrifices were not going to be in vain. We must maximize benefits and reduce costs and to implement the 2015 budget with realism, unity and national cohesion,” Staikouras noted.