ECONOMY

Draft budget to reserve biggest chunk of austerity measures for 2013

Finance Minister Yannis Stournaras is expected to unveil a draft budget on Monday that will aim to produce Greece’s first primary surplus for many years in 2013 by implementing the majority of the austerity measures in the 13.5-billion-euro package it is due to agree with the troika.

The package is set to contain roughly 10.5 billion euros in spending cuts and 3 billion euros in tax hikes. Although Greece is attempting to convince the troika to spread these measures over four years rather than two, it intends to apply most of them next year.

“The draft budget will include 7.8 billion euros in cuts for 2013,» a Finance Ministry official told Reuters.

Belt-tightening has taken a toll on economic activity, suppressing domestic demand and driving the jobless rate to a record 24.4 percent.

The official said the budget will aim for a primary surplus of 1.1 percent of gross domestic product (GDP). He said GDP was expected to contract by 3.8 to 4 percent next year.

This year’s primary deficit – which excludes debt servicing costs – is expected to exceed a targeted 1.0 percent of GDP. The

finance ministry sees the primary deficit at 1.5 percent of national output in 2012.

[Kathimerini