State to put lid on excessive spending

The government may seem reluctant to begin a new round of reforms to Greece’s financially precarious social security system, but it is determined to crack down on unnecessary expenditures this year, government officials say. In 2006, the state will subsidize pension funds to the tune of 6.7 billion euros, while paying an additional 4.3 billion euros to civil service pensioners. On top of that, social security funds will receive an additional 1.6 billion euros, 400 million of which are part of the so-called «tripartite financing» of the social security system passed in 2002 in order to keep the system running smoothly until 2032. Overall, state funding of pension funds will reach 8.28 billion euros in 2006, up from 7.6 billion in 2005. Among other state liabilities to pension funds is the obligation to provide 600 million euros annually to the pension funds of the Public Power Corporation (PPC) and the Hellenic Telecommunications Organization (OTE). These sums were a concession to the unions in return for their acquiescence to listing the companies on the Athens Stock Exchange and partly privatizing them. In the case of PPC, according to sources, the sums spent to finance the employees’ pension fund out of the budget have exceeded state receipts with the partial sale of the company. A crackdown on excessive expenditures will not solve the social security problem and is no more than the management of the situation in order to avoid total collapse. The social security problem in Greece is a major issue. This has been repeatedly pointed out by the Organization for Economic Cooperation and Development, the International Monetary Fund and the European Commission. The government has promised «a long and deep dialogue» when it is evident that its only concern is to avoid the political cost of reform.

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