Last-minute changes show possible budget ‘hole’ of 700 mln€ in 2017

23 May 2016
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The latest painful batch of austerity measures, passed by a slim majority of Parliament MPs on Sunday evening, may still not completely cover memorandum-mandated fiscal targets, with a “hole” of 900 million euros now emerging for 2017 following an unexpected announcement of extra social spending by the Greek prime minister.

Greek Prime Minister Alexis Tsipras announced the establishment of a “social fund” from Parliament’s podium in a bid to allay criticism over the total 5.4-billion-euro tax and social security reform package passed in two doses this month. The package aims to meet fiscal targets through 2018, and also includes the formation of a “superfund” for privatizations and an automatic spending cut mechanism worth up to another 3.6 billion euros – bringing the total to nine billion euros if primary budget surplus goals – as a percentage of GDP — appear off course.

Beyond whatever funding expected to be funneled through the new and still nebulous “social fund”, the government must also cover the figure it expected to save from “freezing” special public sector wage scales (military officers, physicians, judiciary) until 2017, budgeted at 118 million euros, as well as an abandoned idea to retroactively deduct a low-income bonus (EKAS) paid out to pensioners since the beginning of the year.

Last-minute changes include the stepped up imposition of a new tax on beer and landline telephone connections, a unified tax rate of 35 percent on lottery and betting columns, a deadline of Dec. 31 for finding off-set measures to avoid a “freeze” on special wage scales in the public sector and the “sugar-coated” decision on the low-income pension bonus.

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