Police and the armed forces will be asked to cover part of the fiscal gap created by judicial decisions for the partly retroactive return of their salaries to July 2012 levels, while another part of the gap will be plugged by the general public.
A Friday meeting at the Finance Ministry examined the Council of State verdicts and participants concluded that not all the cuts will have to be returned to the police and members of the armed forces, although that might create a political issue.
The meeting focused on the impact of the decisions on the budget, and it appears that no new measures will be needed for this year provided the budget execution beats its targets, as appears likely. However, new and permanent measures may well be needed as of 2015 – amounting to 200 million euros per year to cover the police and armed forces – while the verdict on revoking cuts to judges’ incomes will raise requirements to 270 million euros per year.
The government is therefore planning to offset the salary returns with certain benefits originally due to police and armed forces staff, given also that they did not suffer the salary and pension cuts that the second bailout agreement had provided for from last year.
The rest of the shortfall will likely be covered through a measure affecting all taxpayers, although how this will be implemented is far from clear at this stage.