NEWS

Greek PM set to announce handouts

TAGS: Politics, Economy

Aiming to push the narrative that a new post-bailout era has indeed dawned for the country, Prime Minister Alexis Tsipras is expected to announce handouts and tax cuts worth more than a billion euros in his keynote speech at the Thessaloniki International Fair (TIF) on Saturday.

The measures, which will be financed by a budget surplus in 2019, include reducing value-added tax at cafes and restaurants to 13 percent, at a cost of 350 million euros, and slashing the highly unpopular ENFIA property tax by up to 30 percent, at a cost of 250 million euros.

Tsipras also plans to announce a reduction in social security contributions by self-employed professionals to 13 percent, at a cost of 150 million euros, as well as house rent subsidies.

The government’s key objective, however, is to scrap pre-agreed pension cuts in January, even though the SYRIZA-led government has been divided over the way to go about it with respect to the country’s creditors.

According to reports, several government officials have insisted that a compromise solution must be sought over the matter with the European Commission, while others are calling for the unilateral suspension of the cuts and the creation of a national alliance with other parties to defend the move.

Regardless of the strategy the government adopts, scrapping the measure will be easier said than done, as the agreement of the institutions has been by no means secured.

Sources said after Friday’s Euro Working Group that serious reservations persist whether Greece can actually suspend the measure. It has also been indicated that the International Monetary Fund (IMF) is dead set against putting off the cuts.

Kathimerini understands that a decision on the matter is expected in November when it will become clear whether Greece will meet its target of a 3.5 percent budget surplus. Analysts say that meeting this surplus target would provide scope for the government to scrap the cuts.

Nonetheless, the IMF claims that the pension cuts must go ahead even if there is no fiscal pressure to do so, as it is a structural measure that has already been voted through.

The surplus, which is the result of overtaxation and a freeze on state spending, has become the government’s main weapon to persuade the institutions to go along with its relief measures.

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