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"It will be hell until June"

21 October 2013 / 22:10:58  GRReporter
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A year and a half after two rounds of elections in 2012 and after Greece has been able to slightly emerge from the difficult situation due to the secured primary surplus in the budget, the Greek economy is again entering a particularly critical time.

The supervisory Troika insists on continuing with the cuts in the public sector, on liberalizing the market, opening all professions (engineers, tour guides, medical workers, etc.) and on identifying the measures that the government will adopt for 2014 and 2015.

"It will be hell until June. All issues with our lenders will be put on the table and will be resolved," said Minister of Finance Yiannis Stournaras. Therefore, the return of the Troika’s representatives and the continuance of the negotiations in order to fill the hole in budget for the period 2014-2015 and to consider the issue of public debt are inevitable.

Before returning to Athens, however, the representatives of the lenders have already sent the "bill" following their inspection in September, which shows that the situation is difficult and that their intentions are inexorable.

To Vima newspaper has published a list of 35 points containing all the data and measures that the Troika’s representatives want five Greek ministers, (the Minister of Finance, Yiannis Stournaras, of Labour and Social Security, Yiannis Vroutsis, of Development and Competitiveness, Kostis Hatzidakis, of Administrative Reform Kyriakos Mitsotakis and of Healthcare, Adonis Georgiadis), to consider, namely:

- Whether the primary surplus of 340 million euro is realistic and how it can be increased to 2.8 billion in 2014.

- What measures (except for the cuts in the public sector) will fill the hole in the budget by 2015.

- How the "grey areas" in healthcare funds and budgets, which are considered the new serious threat for the future, will be handled.

The Minister of Finance, Stournaras, told To Vima newspaper that the hole in the budget would be filled "not by the introduction of new measures, but by the implementation of the measures which have been already planned." They are mainly related to the reduction of costs. Stournaras explains that, on the one hand, the Troika has estimated that the hole in the budget for 2014 is 2.5 billion euro but on the other, the calculations of the Ministry show that the required measures will not exceed 1 billion euro. In all cases, the budget for 2014 will be based on the following:

- Increasing the revenue from income tax by 820 million euro due to the elimination of tax breaks

- Increasing the revenues from excise duties on tobacco products and alcoholic beverages, or from the so-called "sin tax", which will provide an additional 190 million euro, which will be submitted to the National Organization for Healthcare Provision.

- The expected revenue from the tax which 50,000 employees, who are currently subject to checks by the office combating economic crimes, will be obliged to pay on the money they have earned abroad.

2015 will be a more difficult year as Greece will have to double the primary surplus (from 2.8 billion euro in 2014 to 5.6 billion euro).

As can be seen from the list, the government (through the Minister of Administrative Reform) has presented to the Troika five categories of institution that will be closed.

As regards structural reforms, however, namely the liberalization of markets and professions, reducing bureaucracy and prices, the Ministry of Development is significantly lagging behind.

The other "target" of the Troika is the Minister of Health who has not only failed to reduce the prices of generics but has not even prepared a list of medicines that are to be sold without a prescription in supermarkets.

In particular, the Troika wants the Greek ministers to submit the following:

Minister of Finance Yiannis Stournaras

1. A list of possible measures, in addition to the administrative reform, that will fill the hole in the 2014-2015 budgets.

2. Information on the effect of the tax measures and on the restructuring of the controlling mechanism.

3. A draft on the medium-term 2014-2017 programme.

4. Comprehensive data on the reform of the income tax.

5. Comprehensive data on the tax return which has not yet been completed ​​and on the obligations of the state to private individuals.

6. A bill on the single tax on real estate.

7. Data on the collection of the property tax.

8. Transferring all tax and customs matters from the office combating economic crimes to the institution of the general secretary in charge of revenue.

9. Completion and publication of the list of debtors who owe the state more than 50,000 euro.

10. Proposals for the resumption of the privatization programme.

11. Real estate management and a study on the impact of rental income, sales and securitizations on debt reduction.

Minister of Labour and Social Security Yiannis Vroutsis

12. An overall assessment of the collection of social security contributions and of the obligations to social insurance funds.

13. A plan to pool the contributions to all funds and to reduce employer’s contributions by 3.9% without forming an additional hole in the budget.

14. Control over the reform of the system of debt collection in the social security funds.

15. Comprehensive data on the amount of pension to be paid.

16. A baseline scenario for the payment of pensions based on the gap over the past four years and forecasts for the period to 2017.

17. Details on the number of pensioners, on the pension cuts and the additional amounts received by the funds due to the increase in the retirement age.

Tags: Supervisory TroikaMinistersRequirementsMemorandumCuts
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