The Minister of Finances Gikas Hardouvelis submitted the 2015 state budget today in Parliament on Friday morning, while Alternate Finance Minister Christos Staikouras presented it to the State Accounting Office.
The 2015 budget, which is expected to be the first balanced budget, makes provisions for a 2.9% growth rate and a 3% GDP (5.6 billion euros) primary surplus in order to cover loan interest payments next year, as well as a reduction of the general government’s debt to 171% GDP (317 billion euros).
The state budget makes provisions of a 50.9 billion euro net revenue, 41.9 billion euros of primary expenses and 6.4 billion euros of public investments. The government has planned to generate 2.5 billion euros from privatizations and expects the rate of unemployment to drop to 22.6%.
While the government has stated that the 2015 will be the first balanced budget, it has not been approved by the troika, after negotiations reached a deadlock on Thursday evening. The main problem is the troika believes that there will be a budget deficit in 2015 ranging from 2.6 to 3.6 billion euros, which the coalition government rejects. The government claims that should any deviations arise it will take the necessary measures (expense cuts).
Nevertheless, the ambitious budget does not include any new measures, nor does it include any reduction of tax rates, which have been postponed for the next phase of the tax reform. As expected the emergency solidarity tax, which was initially intended only as temporary tax, has been extended for 2015 (albeit reduced by 30%).
Ultimately taxpayers will be called to pay a total of 47 billion euros in 2015 – an additional 1.7 to 1.8 billion euros from 2014. Of these additional taxes 805 million euros to come from direct taxation and 930 million euros from indirect taxation (such as VAT).
