Tax cuts, growth seen in 2015 budget
Greece’s economy is on track to emerge from a six-year recession this year and grow by 2.9% in 2015, though unemployment in the bailed-out country is likely to remain high, the finance ministry said Monday.
The government - facing the threat of an early general election - submitted a draft of the 2015 budget to parliament that sees tax cuts and a return to modest growth of 0.6% in 2014, ending the depression that erased roughly a quarter of national output, according to the Associated Press.
“The country is entering a long period of sustained economic growth rates and primary surpluses that will bring growth in employment, reducing unemployment and improving living standards for all citizens,” Deputy Finance Minister Christos Staikouras was quoted as saying.
“This is the result of unprecedented sacrifices made by Greek society, households and businesses. These sacrifices must not be wasted.”
Prime Minister Antonis Samaras’ fragile coalition is hoping to begin easing austerity measures demanded by bailout creditors who provided 240 bln euros in emergency loans.
The bulk of funding from eurozone countries ends this year, while IMF loans will continue to 2016 as national debt is seen reaching 318.6 bln euros this year, or 175% of GDP, according to the draft budget.
Staikouras said the government is committed to reducing emergency taxes, including a deeply unpopular bailout tax known as the solidarity charge.
But he conceded unemployment was likely to average 27% this year before beginning a slow decline.
Megan Greene, chief economist at Manulife Asset Management, said next year’s growth target is optimistic as the government needs a strong performance to meet its targets.
“The draft budget is politically motivated - the whole point is for the government to boost its ever-waning popularity,” she said.
The government faces a strong challenge from the antibailout Syriza opposition party and has called a vote of confidence in parliament this week. Samaras could be forced to call an early general election by February, when the government would need opposition support in parliament to elect a new president.
The pledges to ease up on austerity come as an increasing number of countries, including France and Italy, challenge the strict fiscal discipline championed by Germany, the New York Times reported.
Greece’s budget still requires the approval of the troika, whose representatives have been in Athens since last week inspecting the government’s progress in enforcing economic overhauls, the newspaper said.