A bill aiming to trim Greece’s social security spending will not be enough to cover next year’s fiscal gap, European sources told Kathimerini on Tuesday, as the difference in opinion between Athens and the troika over how much austerity will be needed next year looks set to intensify.
The government was due to submit to Parliament late on Tuesday or early Wednesday a draft law that aims, among other things, to limit evasion of social security contributions. Along with the across-the-board implementation of a unified public sector wage structure and several other measures, the government hopes to produce 500 million euros of savings next year. The troika, however, believes that much more will be needed, with the fiscal gap likely to come in at around 2 billion euros.
European sources told Kathimerini’s Brussels correspondent Nikos Chrysoloras that the troika does not believe the bill will result in the projected savings and that these savings will not be enough anyway.
The two key stumbling blocks to Athens and its lenders agreeing are Greece’s projected revenues for next year and its forecasts for welfare expenditure. The troika believes that social spending will be higher than Greece expects next year due to high unemployment and the growing inability of firms to pay social security contributions. The lenders are also unwilling to accept Greek projections for tax revenues next year, which include extra income from an improvement in tax collection and a further clampdown on evasion.
The troika’s immediate concern upon the return of its inspectors to Athens next week will be to check on how close Greece is to meeting the “milestones” it has agreed in order to secure its next bailout tranche of 1 billion euros. One of those commitments is placing 12,500 civil servants in a mobility scheme. Speaking in Brussels on Tuesday, Administrative Reform Minister Kyriakos Mitsotakis said that this target is likely to be met next week.
He added that the government is looking for another 1,270 employees to dismiss in order to meet its target of 4,000 civil servant sackings by the end of the year. It is still not certain that the troika will approve the government’s calculations as 230 dismissals relate to public sector workers fired for breaking the code of conduct. Another 500 or so are employees who quit because of poor health.