ECONOMY

Gov’t lowers 2015 budget target

The first draft of the 2015 state budget sent to the representatives of the country’s international creditors by the Finance Ministry anticipates a primary surplus that will be 1.3 billion euros less than that foreseen in the provisions of the midterm fiscal plan. The fiscal developments are the main issue the government plans to discuss with its creditors given that the budget must be tabled in Parliament on October 6.

Minister Gikas Hardouvelis sent the first draft to the representatives of the European Commission, European Central Bank and International Monetary Fund during a video conference on Wednesday in order to lay the groundwork for discussion from next week. Sources revealed that the draft provides for a primary surplus of 2.3 percent of gross domestic product in 2015, although the target agreed with the creditors had amounted to 3 percent.

The reduction is due to the incorporation of all the tax-easing measures announced by Prime Minister Antonis Samaras earlier this month and which are already being implemented, along with the reinstatement of police and armed forces salaries which had been subject to cuts. Even without these measures the troika had expected a fiscal gap of 2 billion euros for next year.

Among the provisions are a 30 percent reduction in the special consumption tax on heating oil, which should bring its final retail rate down by 10-12 cents. The government will also reduce the new single property tax (ENFIA) next year. People with expired debts to the tax authorities and social security funds will be allowed to pay their dues in more installments, with the plan – scheduled for submission in Parliament next week – providing for 100 tranches for debts up to 15,000 euros and 72 for debts above that threshold.

The draft further anticipates the return of police and armed forces salaries to the level of July 2012, which will burden the budget with 200-250 million euros per annum. The solidarity tax is to be prolonged by one more year but reduced by 30 percent, the draft budget says. Another reason for lowering the primary surplus target is the additional funding that social security funds will require in 2015, amounting to some 1 billion euros.