BUSINESS

Budget provides for 4.5 pct contraction

Draft includes austerity measures totaling 9.2 billion euros and sees primary surplus of 0.5 pct of GDP By Sotiris Nikas

The draft budget for 2013, which provides for measures of 9.2 billion euros, an economic contraction of 4.5 percent and a primary surplus of 0.5 percent, will be tabled in Parliament by Finance Minister Yannis Stournaras at 11 a.m. on Wednesday.

The budget will have to get the House?s vote by November 11, as Greece?s international creditors have demanded its approval be brought forward as a condition for the disbursement of the next bailout tranche. The draft budget was originally scheduled to be tabled on November 20.

Along with the budget, the government will submit the updated midterm program as a separate chapter with a report about the measures that will have to be taken by 2016.

The rush to draft the 2013 budget meant that ministry officials had to work fast and only managed to complete the work concerning the main figures of the Greek economy on Tuesday. Sources say that the conclusion they reached last night was that the general government budget next year would have a surplus of between 0.4 and 0.6 percent of gross domestic product, while the economic contraction would go down to 4.5 percent from an estimated 6.6 percent of GDP this year.

These estimates are very different to the original ones in the first draft submitted on October 1 as well as to those included in the draft memorandum between Athens and its creditors; the recession estimates had ranged between 3.8 and 4.2 percent.

The Finance Ministry is therefore proceeding to its own estimates, which are closer to those of the country?s creditors but are not the same. Once the final text of the memorandum is ready, the two sides should be even closer. Whatever the case, the possibility of a supplementary budget in the first quarter of 2013 is highly likely if forecasts appear not to be realistic, as was the case earlier this year.

Besides the 9.2 billion euros of measures for 2013, the midterm program will also include measures for the period from 2014 to 2016, adding up to another 4.3 billion.

After the draft budget is tabled on Wednesday morning, Stournaras will participate in the Eurogroup?s conference call.

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