Tsipras presents government policy statements to Parliament

7 October 2015
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06D57D9C-6C93-478C-82CE-6AC23377FE41_cx0_cy1_cw0_mw1024_s_n_r1Greek Finance ministry on Monday tabled to Parliament the draft budget plan for 2016 envisaging the government’s priorities for social justice and fiscal responsibility.
The draft budget plan forsees that the general government will present a primary deficit of 418 million euros, or 0.24 pct of GDP this year.

This estimate was based on the implementation of structural reforms and institutional changes agreed with the creditors, such as interventions in tax policy and social insurance in the second half of the year.

The ministry said that the government has made efforts to exploit a fiscal area which was safeguarded after hard negotiations with the country’s creditors and noted that drafting of the 2016 budget was made amid adverse economic conditions and under political commitments made by the government in an agreement with its lenders.

The general government budget envisages a primary surplus of 894 million euros in 2016, or 0.5 pct of GDP, in line with an agreement signed with the troika. The budget includes a series of interventions such as reforming a VAT code, changes in a special solidarity contribution, raising advance payment of income tax for self-employed, raising tax rates for incomes from rents and expanding the Greek state’s participation to 30 pct of OPAP’s profits from videogames.

The interventions on social insurance include saving money from reforming the public sector and social insurance organizations, raising contributions for healthcare on pensioners and reforming the lump sum payment system.

The government secured additional funds for social protection and economic activity, such as raising a spending ceiling for state hospitals by around 150 million euros in 2015, 2016, and later. It also allows for around 100 million euros which will offer financial relief to the weaker classes and for raising spending of the Public Investment Program by around 50 million euros to boost employment and economic growth.

“We are certain that we will successfully deal with a difficult challenge of exiting the crisis and protecting, as we must, our fellow citizens with the greatest need,” the ministry said in the draft budget plan.

The 2016 draft budget plan also envisages a GDP contraction by 2.3 pct this year and by 1.3 pct in 2016, with the country’s Gross Domestic Product falling to 173,365 billion euros next year. The unemployment rate is projected to rise to 25.8 pct of the workforce in 2016, from 25.4 pct this year and 24.6 pct in 2014.

Regular budget net revenues are expected to ease to 53,344 billion euros in 2016 from 53,480 billion this year, while spending is projected to ease slightly to 55,685 billion euros from 55,690 billion euros over the same periods, respectively. Public Investment Program’s spending its expected to rise to 6,750 billion euros in 2016 from 6.4 billion this year.

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