The IMF, EU and ECB troika appears to be confident about its prediction of a 2 billion euro budget gap in 2015, based on communication exchanges with the State Budget Office in the past few days. It has been suggested that the prediction may be used as leverage to pressure the coalition government on critical reforms in the country’s insurance system, since the funds will have the greatest fiscal needs.
Based on reports, the troika has included the cost of tax cuts and the restoration of the wages of uniformed officers in the 2 billion euro budget gap. Further judicial decisions may also result in further charges to the gap. The coalition government however does not accept the troika prediction and is confident that it will achieve its goal of a 3% GDP primary surplus based on the measures that have been implemented.
The financial developments in October however may have a negative development on the negotiations with the troika. Reports suggest that Greece was off-target due to the delays caused by the imminent provision of 100 installments for tax debts, among others.
The 2015 budget gap is closely associated to the submission of the final version of the 2015 budget, which will be submitted in Parliament at the end of November. Should the coalition government and troika be unable to come to an agreement, the current review process will become increasingly difficult.
