Government mulls cuts to public investment program

Government mulls cuts to public investment program

The tense political rhetoric from both the government and the opposition is expected to intensify further over the coming weeks in the wake of Prime Minister Alexis Tsipras’s pledges for handouts and hirings, and reports that authorities are planning cuts elsewhere to keep the budget on track.

According to sources, the government is planning to make cuts to the Public Investment Program to bridge the gap between the European Commission’s predictions for Greece’s primary surplus target and the country’s forecast. The EC believes Greece will fall slightly short of the target of 3.5 percent of gross domestic product. To cover this projected gap, the Greek government is said to be mulling cutting some 280 million euros from the investment program, which has been cut before to help Greece meet budget targets.

In comments in Parliament last week, New Democracy’s shadow finance minister, Christos Staikouras, remarked that the trimming of the investment program was one of a series of measures employed by the government, along with overtaxation, to raise the funds to repay certain categories of civil servants including armed forces employees, police officers and judges for cuts to their salaries and pensions. ND backed the bill to restore the lost income, along with most parties in Parliament, but it suggested the move was too little, too late.

A key concern is that cuts to the, already whittled-down, program, will undermine efforts to boost sluggish growth. Apparently Finance Minister Euclid Tsakalotos is opposed to the plan, mindful also of the negative message it would send to investors and markets.

On the other hand, Labor and Social Security Minister Effie Achtsioglou objects to any potential reductions to pensions, in line with Tsipras’s determination to avert a fresh round of cuts planned for January in view of looming general elections.

In the coming weeks, Tsipras is expected to highlight his pledges for handouts and public sector hirings as the beginning of an effort to redress the injustices of austerity.

ND leader Kyriakos Mitsotakis, for his part, is expected to present himself as a “unifying” figure, opposite a divisive Tsipras, ready to seek alliances even if the conservatives win next year’s elections with a comfortable majority.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.