Budget to be tabled without troika approval

Finance Minister Gikas Hardouvelis is set to table the final draft of the 2015 budget in Parliament on Friday without having secured the approval of the country’s creditors. It will be based on the midterm fiscal plan agreed by Athens and the troika.

The representatives of the country’s three creditors – the European Commission, the European Central Bank and the International Monetary Fund – are for now sticking to their estimate for a fiscal gap next year that could reach up to 3.6 billion euros as things stand, while the government continues to reject this forecast, poignantly recalling that the troika had also anticipated fiscal gaps for last year that never materialized.

In this context the 2015 budget, with no new austerity measures, provides for a primary surplus of 3 percent of gross domestic product. Sources also said that this year’s primary surplus will amount to 1.8 percent of GDP, against a target for 1.5 percent.

Officials familiar with the goverment’s negotiations with Greece’s creditors say that the troika does not intend to budge on its estimates, insisting on last-minute changes to the budget so as to guarantee that the target of a 3 percent primary surplus is attained. Such changes would entail new measures, which the government clearly rejects, considering some methods it has resorted to in the past to overcome such deadlocks, the same officials note.

The most likely strategy would be to let the first few months pass so as to see which side was right in its estimates, and if the troika is the one to be proven correct then there would be two options: to revise the estimates through the next midterm fiscal plan, set for February or March 2015, or to table a supplementary budget that would bridge any gaps created.

The troika believes some changes might be introduced to the budget even after the debate in Parliament has started, but the government is aware of the negotiation process’s tight timetable and realizes such a possibility is quite unlikely.

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