Submitting the draft budget for 2012 in Parliament on Friday, Finance Minister Evangelos Venizelos said that state revenue would exceed spending next year, adding that the deficit was expected to contract to 5.4 percent of gross domestic product from 9 percent this year.
He added that no further austerity measures had been included in the blueprint for next year. “The budget for 2012 will not be accompanied by legislation foreseeing new tax hikes and other revenue-raising measures,” he said. “As long as we implement measures that have already been voted through Parliament we will not need to take any new ones.”
Following a cabinet meeting where the draft budget was given the seal of approval by ministers of the new coalition government, Venizelos said it also needed the backing of Greece’s Parliament and noted that a vote would be held on December 7.
"For the first time in the last decades, the Greek parliament is called upon to discuss and ratify the budget under conditions of acute crisis and pressure,» Venizelos said. But he insisted that the 2012 budget constituted “a tool to exit the crisis” that would help Greece move from the “a state of pessimism to a new beginning.”
The minister told a press conference that the budget was “the first major initiative of the new government of Lucas Papademos,” a former banker who clinched a vote of confidence in the country’s new unity government on Wednesday. Venizelos described the blueprint as “a budget of consensus.” “It represents four fifths of the country’s Parliament and that is significant,” he said referring to the 300-seat House.
According to the draft budget, revenue is expected to reach 54.4 billion euros in 2012, compared to 51.3 billion euros this year, while spending will be curbed by 5 billion euros. The draft budget also foresees an additional 3.6 billion euros in tax collection.
Venizelos noted that all projections in Greece’s draft budget for next year were based on the assumption that a European Union debt deal, which was hammered out in Brussels last month would materialize. “The responsibility for this is largely ours,” he said, noting that austerity measures already voted through Parliament must be enforced.
The minister presented two possible scenarios affecting the budget deficit – one taking into account a bond swap foreseen in the latest European Union debt deal for Greece and the other disregards the swap. In the first case, the deficit would be reduced to 5.4 percent of GDP from the 6.8 percent foreseen in the budget while in the second scenario, the deficit would drop to 6.7 percent.
The aim is for Greece to report a primary budget surplus of 1.1% of GDP next year, Venizelos said. “It will be a small primary surplus but a surplus nonetheless,” he said.