ECONOMY

Simitis unveils new package today

Prime Minister Costa Simitis is due to announce today the package of social measures for 2002-2004 as well as steps to reinforce the country’s entrepreneurship. The Inner Cabinet which is set to meet today, is expected to approve the basic objectives outlined in the new budget and the distribution of appropriations. The move comes just four days before the premier is due to make his state of the nation address at the International Trade Fair in Thessaloniki. Sources said measures to boost entrepreneurship include lowering the tax rate by up to 10 percentage points over the next three years for listed companies planning to merge. Businesses not listed on the Athens Stock Exchange in turn would see a 5-percent cut in their tax rate. The State also plans to allow companies to record added value accruing from their merger with other firms in an extraordinary tax-free reserve fund. This facility will be available even if the integrated venture distributes or capitalizes its reserves. The measure aims to promote large business groups in view of the trend towards globalization. It is also expected to boost the ASE by reducing the number of listed companies. The merged companies will attract both local and foreign investors. The Inner Cabinet is also due to approve social funding to the tune of 800-1,000 billion drachmas for the next three years. Vulnerable groups such as low-paid pensioners and the unemployed will benefit from the state largess. Sources said 35 billion drachmas will be paid out next year, comprising a one-million-drachma subsidy for a third child and allowances for single-parent families. A sum of 61 billion drachmas annually will go toward poor families living in mountainous, low income areas, the long-term unemployed aged between 45 to 65 years and poor families with children under 16 years old. Farmers with low pensions will also see an increase in their retirement benefits and social allowances, up by 5,000 drachmas respectively. The social package is expected to burden the budget by 100 billion drachmas. The 2002 budget, due to be tabled in Parliament on October 1 together with financial figures for 2003 and 2004, is projected to increase by 7.8 percent from this year’s budget. Additional revenues are estimated at 960 billion drachmas. Spending is set to increase by 6 percent. The rate of increase is expected to be higher for education, health and labor, projected at 7 to 8 percent. The regular budget foresees revenues of 13.6 trillion drachmas and spending of 12.6 trillion drachmas. It also estimates a surplus equivalent to 1.3 percent of gross domestic product.