Greek gov’t prepares proposals to plug fiscal gap

Greek gov’t prepares proposals to plug fiscal gap

The government is preparing a convincing package of measures to lead to the reduction of next year’s fiscal gap, estimated at 0.5 percent of gross domestic product. As one eurozone official said, Greece will have to complete and forward its draft budget, complete with the bridging of that gap, by October 15.

Finance Ministry officials say the gap will be plugged by improving revenue collection rates, increasing online transactions and expanding investments that will lead to GDP growth.

The same official told reporters in Brussels that Greek fiscal matters will not form part of next Wednesday’s Eurogroup meeting in Luxembourg, noting that the provisional report “that we have in our hands by the institutions is positive, but there is a fiscal gap identified in the 2020 budget.” Kathimerini understands there will be staff-level conference calls taking place in the coming days so as to cover all outstanding issues, particularly those concerning the fiscal gap, so as to meet the target for a primary surplus of 3.5 percent of GDP.

Ministry sources say the package of pledges by Prime Minister Kyriakos Mitsotakis at the Thessaloniki International Fair last month has been weighed in fiscal terms and the creditors agree with Athens that it will cost no more than 1 billion euros. The 900-million-euro disparity between the two sides mainly stems from the different estimates on the debt repayment programs in up to 120 tranches and value-added tax takings.

It is possible that the tax bill to be submitted in Parliament in mid-October will leave some room for maneuver via ministerial decisions if the gap is not seen to be bridged. For instance, the details on the income tax discount – also known as the tax-free threshold – may be announced through a decision to be issued at the end of the year.

Mitsotakis and Finance Minister Christos Staikouras will on Friday meet with outgoing Economic and Monetary Affairs Commissioner Pierre Moscovici in Athens.

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