The government presented the 2019 draft budget to the European Commission on Monday. The draft featured the two scenarios, with and without the pension cuts and the offsetting measures, that the version submitted in the Greek Parliament had also included. At the same time budgetary figures for this year showed that public investments had been sacrificed on the altar of the primary surplus.
The baseline scenario in the 2019 draft budget, which takes into account the planned cuts to the majority of pensions and the offsetting measures, provides for a primary surplus of 4.2 percent of gross domestic product. The draft then includes the stated desire of the government not to reduce the pensions from January, or implement the offsetting measures, leading to a primary surplus of 3.56 percent of GDP.
Meanwhile, the changes to what has been agreed with the country’s creditors drew criticism from the Hellenic Federation of Enterprises (SEV) in its monthly bulletin issued on Monday.
“Such changes,” it said, referring to the alternative draft budget, “undermine stability in the tax system and markets’ confidence in the prospects of the Greek economy.”
The industrialists’ association was particularly critical of the fact that the alternative budget leaves out the reduction by 3 percentage points (from 29 to 26 percent) of the corporate tax rate along with the lightening of income tax and the special solidarity tax that have already been drawn up as legislation.
The budgetary data published on Monday in Athens for the first nine months of this year point to a considerable primary surplus in 2018, but also reveal that that has been at the expense of public investments.
The provisional data issued by the Hellenic Statistical Authority (ELSTAT) showed a primary surplus of 4.81 billion euros in the year to end-September, against a target for 2.52 billion. The draft budget for 2019 provides for a 445-million-euro overrun in this year’s primary surplus.
However, the expenditure of the Public Investment Program in the January-September period came to just 1.67 billion euros, compared to a target of 2.91 billion euros, depriving the economy of 1.24 billion euros so far this year.