Syriza submits Greece's 2018 Budget with high surplus and growth, amid new Austerity Measures

Screen Shot 2017 11 22 at 10.59.38 am

Screen Shot 2017 11 22 at 10.59.38 am 

by Aggelos Skordas

The Syriza government submitted the 2018 state budget draft to the Parliament late on Tuesday, aiming to exceed expectations with a primary surplus of 3.8 percent of the country’s Gross Domestic Product (GDP) as well as a growth rate of 2.5 percent, introducing, though, additional austerity measures summing up to one billion euros in new taxes.

The government foresees that the country will be ready to return to capital markets by next year in order to strengthen liquidity, as this is the last budget submitted under international rescue programs, first introduced eight years ago. Greece’s creditors have initially set the target for next year’s primary surplus at 3.5 percent, which excludes debt servicing costs.

The budget is due to be voted on in Parliament on December 22. The first Finance Committee meeting will be held on Thursday November 23 and will be followed by three more until its introduction in the Parliament plenary, the first meeting of which is scheduled for Monday December 18. There will be a total of five plenary sessions.

According to the Ministry of Finance, although marginally higher than the equivalent estimate of 2017, the ongoing fiscal effort along with the removal of economic uncertainty and the significant improvement of the economic climate are sufficient factors for its safe achievement. The state budget includes a social dividend payment to 1,459,834 households, with an average amount of 483 euros per household.

The total number of citizens to be profited from the aid package is estimated to 3,472,734 (i.e. 32% of the population). It also includes a list of 12 measures that were passed in Parliament but have yet to be implemented: Among others, increases in social security contributions, cuts to heating subsidies, higher tax for properties, elimination of value-added tax breaks for the Aegean islands that had enjoyed a reduced rate of VAT and a new hotel stayover levy, aiming to raise almost one billion euros in revenues.

The state budget for 2018 was submitted by the Deputy Finance Minister, George Chouliarakis, to the President of the House, Nikos Voutsis, who wished “the next budgets to be better”. According to Finance Minister Euclid Tsakalotos, the budget “marked the country’s exit from a long period of macroeconomic adjustment programs”, while main opposition New Democracy party leader Kyriakos Mitsotakis criticized the government for playing “the benefactor”. “You achieved the surplus by pretending to be the Santa Claus in a country where the citizens have forgotten Christmas”, he added.

The budget for 2017 is estimated to achieve a primary surplus of 2.44 percent of the GDP (while the country’s obligations as these emerge from the memorandum set the target to 1.75 percent), including a 1.4 billion euros social dividend payment, deduction returns to pensioners and an economic growth rate of 1.6 percent. The Ministry of Finance estimates that the decisive factor of the 2017 exceedance was the better-than-expected result of the insurance funds, both in revenue and expenditure, as well as the sound management of the regular budget expenditures.

GCT Team

This article was researched and written by a GCT team member.