The 2014 budget, the first one after six years of recessions to include growth provisions, was submitted in Parliament by the Minister of Finances Yannis Stournaras and later presented by his deputy Christos Staikouras. A few hours later the European Commission spokesperson Simon O’ Connor confirmed that the budget has not been approved by the troika, hinting towards further changes and amendments.

Aside from a 0.6% GDP growth rate, the budget predicts a restriction of the public debt to 174.8% GDP, a marginal reduction of unemployment and an increased primary surplus of 1.6% GDP, about 2.96 billion euros. The budget does not include any provisions for wage or pension cuts.

Increased revenue

According to the 2014 budget, public revenue will increase by 4.1% (2.18 billion euros) compared to last year, for a total of 54.69 billion euros. The government is banking on a considerable 1.15 billion euro increase (41.4%) of revenue from real estate and expects to collect 3.94 billion euros.

Revenue from taxes has been estimated to be 45.66 billion euros, compared to 44.4 billion this year. The budget stipulates that direct taxes will increase by 1.69 billion (for a 21.57 billion euro total), while indirect taxes will decrease by 432 million for a 24.09 billion euro total. Revenue from VAT and real estate transfers is expected to drop by 0.8% and 62.1% respectively.

Even though the effectiveness of TAIPED has been questioned, the government expects to generate some 3.56 billion euros from privatizations of approximated 3,000 plots of public property and land. The government is also preparing a bill for the definition, management and protection of the coastline, which will be submitted for public discussion by the end of the year.

Reduced expenses

As expected, the budget contains significant budget cuts worth 3.079 billion euros, with the total expenses in 2014 estimated at 56.248 billion euros. The greatest cuts were in primary expenses, where the 2.885 billion cuts being the regular budget to 41.946 billion euros. The payment of interest on the public debt will be increased by 50 million (0.8%) to 6.15 billion euros.

While wages and pensions will not be reduced, the cost will be reduced by 280 million euros to 17.723 billion euros as a result of interventions to fiscal policy of recruitments and changes to teaching hours. Pension expenses on the other hand are set to increase by 262 million (4.5%) due increased retirements in 2013 and 2014. Finally, consumer expenses are scheduled to drop by 443 million euros (18.7%) in 2014, by drastically cutting down on staff transportation and utility expenses.

Corrective interventions

The budget also includes a program of corrective actions to bolster insurance funds and help combat contribution evasion. This package of interventions is expected to generate 600 million euros. Amongst these actions are the restructure of self-employed insurance fund OAEE.