Greek economy to contract by 0.7 pct in 2016‏

20 November 2015
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Greek Finance Minister Euclid Tsakalotos on Friday tabled in parliament the final draft of the 2016 state budget designed to combine fiscal responsibility with social justice and the redistribution of burdens.

In the period from tabling the pre-draft budget until tabling the final draft, there was a significant positive development: an upwards revision of economic growth in 2015 and 2016. This revision showed that the Greek economy was not in a recession in 2015 since the country’s Gross Domestic Product remained unchanged. In comparison with a provision included in the pre-draft for a contraction of 2.3 pct, the final estimate is an impressive improvement. The Greek economy resisted and rejected all catastrophic scenarios.

The improvement for 2016 is smaller but not insignificant. From an initial estimate for a contraction of 1.3 pct, the final draft envisages a -0.7 pct change. This improvement offered a small fiscal space which allowed for the reduction of fiscal measures by around 500 million euros. The annual return of fiscal measures has fallen to 5.7 billion euros, from 6.2 billion in the pre-draft budget. This means that the state will receive 500 million euros less from the private economy. Also, credit to state hospitals grew by an additional 300 million euros compared with the 2015 budget and finally, raising tax returns by 180 million euros, further reducing the state’s overdue debt to citizens.

The budget envisages a provision for 150 million euros in revenue from revising income tax for individuals.

The 2016 budget envisages net budget revenues of 53.527 billion euros, up from 53.344 in the pre-draft budget, down compared with 55.603 in 2015. Regular budget net revenue is projected at 49.107 billion euros in 2016, from 49.462 in the pre-draft budget plan and 50.871 billion in 2015. Budget spending is projected at 55.751 billion euros in 2016 from 55.685 billion in the pre-draft budget plan and 55.705 billion in 2015. Regular budget spending is envisaged at 49.001 billion euros in 2016, from 48.935 billion in the pre-draft budget plan and 49.305 billion in 2015.

Capital spending is projected at 5.930 billion euros in 2016, from 5.930 bln in the pre-draft budget plan and 5.900 billion in 2015, while defense spending are expected to be 598 million euros, unchanged from the pre-draft budget plan, although down from 700 million euros this year. Public Investment Programmes’ spending is projected at 6.750 billion euros in 2016, from 6.400 billion in 2015.

State budget cash primary surplus is projected at 3.706 billion euros in 2016, from 3.590 bln in the pre-draft budget plan and 5.797 billion in 2015, while primary state budget surplus (ESA) is projected at 1.860 billion from 2.346 billion in the pre-draft budget plan and 4.512 billion in 2015.

The country’s Gross Domestic Products is projected to reached 174.437 billion euros in 2016, from 173.365 in the pre-draft budget plan and 184.870 billion in 2015.

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