Stability and spending

The government made clear yesterday that its economic policy will stay firmly on the road of macroeconomic stability and the gradual implementation of structural reforms. At the same time, within these limitations it plans to cover, to an extent, the many social needs that confront it. At a four-hour Cabinet meeting yesterday, the government adopted the framework for the economic and social policy of 2002-2004, basing it on the twin foundations of stability and social spending. The one pole is stability and development, the other is social policy, the strengthening of the new social state, Prime Minister Costas Simitis said after the meeting. Simitis, in other words, rejected the demands he has faced for a change in economic policy since his government was forced to reverse itself on social security reforms it proposed in March. The Cabinet agreed on reducing the public debt and approved a 5,000-drachma-per-month increase for low-income pensioners, at a cost of 400 billion drachmas. Another 210 billion will be spent in benefits for the unemployed, fighting poverty and social exclusion and helping people with disabilities. A further 190 billion will go toward paying family bonuses and civil service pensions, plus another 45 billion for employment policies. This is aside from the funds that will be taken from the EU’s Third Community Support Framework, in which 480 billion will be spent from 2001 to 2004 to help employment and promote entrepreneurship among young men and women and help other groups. The Cabinet also agreed on a first wave of tax reforms aimed at promoting mergers, and it agreed that the major tax reform will be carried out in 2003. Simitis, in effect, accepted his economic aides’ proposals for a moderate policy in 2002. This is intended to reserve funds that will then be spent more liberally in 2003, as elections must be held by the spring of 2004. The opposition New Democracy party leader, Costas Karamanlis, reacted angrily to the announcement. Simitis, he charged, has given up to the establishment, has reached a compromise with the establishment of corruption and employed distorting lenses in order to change the image of reality. He called on Simitis to hold a public dialogue, which the government spokesman rejected as a display of fireworks. Bus owners launch strike tomorrow

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