Mid term plans include freezing wage and pension expenses

Economy is expected to recover gradually, while the rate of unemployment begins to deescalate

Friday, May 02, 2014
Mid term plans include freezing wage and pension expenses

According to the new Medium Term Fiscal Strategy plan for 2015-2018 which is currently being discussed in Parliament, the State will freeze wage and pension expenses at 18 billion euros for the five-year period.

Meanwhile, the economy will begin to grow (0.6% GDP this year), while unemployment begins to drop and the primary surpluses continue to soar. Should this trend continue, of achieving fiscal goals, the Deputy Minister of Finances Christos Staikouras revealed that then the government will be in the position to begin reducing taxes, further encouraging growth.

The strategy plan suggests that the primary surplus in 2014 will be 2.3% GDP (4.19 billion euros), which will rise to 2.5% (4.737 billion euros) in 2015, 3.5% (6.955 billion euros) in 2016, 4.6% (9.423 billion euros) in 2017 and 5.3% (11.585 billion euros) in 2018. As for fiscal gaps, the estimate for 2015 is 911 million euros and 1.1927 billion euros in 2016 (nb: the sums are not accumulative). The fiscal gap of 2015 will be revised in September along with the draft of the new budget and should it remain unchanged, then further measures and interventions may be necessary.

According to the strategy plan Greece’s soaring public debt is expected to be 173.9% GDP in 2014, 168.3% in 2015, 158.9% in 2016, 149/1% in 2017 and 139.1% in 2018. Mr. Staikouras maintained that achieving these goals will force creditors and partners alike to take initiatives towards further supporting the long term sustainability of the debt.

Primary expenses for 2014 are estimated to be 42.6 billion euros and will then drop to 41.4 billion euros in 2015, 41.2 billion euros in 2016 and 2017 and 40.9 billion euros in 2018. The coalition government’s strategy plan notes that during the 2015-2018 period there will be 51,500 new recruitments and 73,500 departures in the public sector.

The coalition government has estimated that it will collect 55.9 billion euros in 2014, 53.2 billion euros in 2015, 53.3 billion euros in 206, 55.9 billion euros in 2017 and 57.4 billion euros in 2018. Revenue from privatizations during have been estimated to be up to 12.828 billion for 2014-2018 (or 11.315 billion euros for 2015-2018).

While the medium term fiscal strategy plan includes expense provisions for compensating judicial officers (in accordance with court orders that have been issued in relation to prior wage cuts), the plans do not include any reference to the similar additional expenses for uniformed officers, who have also appealed against wage cuts they have suffered. As such, Mr. Staikouras hinted towards “alternative measures” to cover the additional expenses.