ECONOMY

Three gray zones in next year’s budget

The 2014 budget, whose latest draft was tabled in Parliament on Thursday, has three gray zones that may force the government to make revisions within 2014.

The first concerns the drastic cuts in social security fund grants, by 1.7 billion euros, and healthcare expenditure (900 million euros), so as to meet the targets set in the medium-term fiscal plan.

Bearing this in mind, the Labor Ministry has proposed a series of interventions aimed mostly at increasing revenues and, to a lesser degree, slashing spending. However, the representatives of the European Commission, European Central Bank and International Monetary Fund – known as the troika – have not been convinced by the ministry’s plan and are requesting more information that will back up Athens’s expectations for an increase in revenues. One cannot rule out a demand for an additional cut in expenditure so as to meet the target for reducing social security fund spending by 1.7 billion euros.

Furthermore, according to the budget, hospitals will receive 528 million euros less next year than in 2013. This will be achieved through the reduction of pharmaceutical expenditure by the social security organizations. The National Organization for Healthcare Provision (EOPYY) is expected to face problems as it will collect 334 million euros less in 2014 than this year.

Still, Finance Ministry officials insist that the targets will be achieved.

There are two more gray zones in the budget. The Finance Ministry and the troika have agreed that 2014 will be the first year of recovery after six years of recession. The forecast for marginal growth of 0.6 percent is reliant on a 5.3 percent increase in investments and 4.6 percent exports growth. At the moment, no one can guarantee that these targets can be met.

Moreover, the budget depends to a great extent on an improvement in tax revenues. Yet given that Greek taxpayers have reached their limit after three years of fiscal adjustment, it is far from certain that they will manage to pay the additional 2.4 billion euros in income and property taxes that the draft budget provides for next year.