Hardouvelis asks for some room to breathe

Finance Minister Gikas Hardouvelis requested that the country be given some room to breathe in the fiscal adjustment process, while speaking at a ceremony in Athens for the signing of loan contracts with the European Investment Bank (EIB) on Thursday.

“No fiscal adjustment is for ever. It cannot last long unless major investment initiatives geared toward growth are taken in order to create jobs and bring revenues to the people,” Hardouvelis said. He added that “Greece is in need of some room to breathe, particularly in terms of incomes, so that the people realize that we are at last reaching the end of the crisis.”

With this latter point in mind, the Finance Ministry is preparing to incorporate tax-easing policies in the first draft of the 2015 budget. The measures that Prime Minister Antonis Samaras announced a couple of weeks ago in Thessaloniki, including reductions in the solidarity levy and the special consumption tax on heating oil, are already being discussed with the country’s creditors.

A top Finance Ministry official said on Thursday that the government’s target of reaching a primary budget surplus of 1.5 percent of gross domestic product will be achieved. However it has not yet been decided whether the draft budget will aim at a primary surplus target of 3 percent of GDP in 2015 (as the midterm fiscal plan provides for) or a lower figure, with this decision having been put back to a later date.

In an interview with German newspaper Handelsblatt published on Thursday Hardouvelis expressed optimism that Greece will be able to plug the “small” fiscal gap anticipated for next year, which the government estimates at 900 million euros to make the target of a 3 percent primary surplus.

The EIB signed contracts with the Greek government for loans totaling 815 million euros for the construction of highways, the Thessaloniki metro and bolstering the Greek power grid.

“With this strong move we continue to provide our support toward growth and employment in Greece. We are focusing our action in key sectors and support the Greek state in the implementation of the projects for the construction of the country’s major highways and the Thessaloniki metro, which will improve living conditions and the financial environment. We are also contributing to the project of the power interconnection of the Cyclades,” said EIB President Werner Hoyer.

The EIB loans break down into 300 million euros for highways, 200 million for the Thessaloniki metro, 180 million for upgrading the power grid and 135 million for the interconnection of the Cyclades.

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