‘No surprises’ in 2015 budget approval
A slim majority of MPs was expected to vote through the government’s budget for 2015, with the main focus being cutbacks, recover and reform.
Despite harsh criticism from the opposition AKEL, the smaller socialist EDEK and the centre-right DIKO, the former coalition partner was expected to approve the budget with reservations.
The budget could only pass through the 56-stea House with the 20 votes from the ruling DISY, the single EVROKO vote and at least five of the eight DIKO deputies. Independent Zacharias Koulias, who is expected to rejoin the ranks of DIKO after being expelled by former party leader Marios Garoyian, declared earlier that he would vote against the budget.
The main features of the budget are aligned with the obligations under the memorandum of understanding (MoU) with the Troika of international lenders, who are somewhat upset that the package of measures on foreclosures had been held up since October.
AKEL said it would vote against the budget becaise “it is the implementation of the unpopular Troika and government targets”, similar to words from EDEK, the Citizens’ Alliance and the Greens.
DIKO said it wanted some of the terms Memorandum with the Troika to be renegotiated.
The budget was presented by Finance Minsiter Haris Georghiades on Thursday and the debate started on Monday with the read-out of the House Finance Committee report, which said that the economic environment remained “difficult” despite the projections of the Ministry of Finance.
The report acknowledged the positive course of public finances, the reduction of the cost of borrowing and the upgrade of the economy by international rating agencies, as well as the fact that the government should continue the path of reforms.
Georghiades kicked off the parliamentary debate around his reservedly optimistic budget for 2015, by calling on all parties to cooperate, while saying that next year will be one of recovery, reforms and changes.
He also warned that “neither the slogans, nor a rejection will ever rid us of the Troika” of international lenders, possibly addressed to opposition parties Akel and socialist Edek that suggested alternatives to the insolvency bills.
The state expects revenues of EUR 5.9 bln and expenditure of 6.6 bln, with a modest growth rate of 0.4% predicted for 2015, 1.6% in 2016 and 2% in 2017.
“We took over an economy under collapse and today we have an economy that is recovering,” Georghiades said in his second annual budget speech since the present administration took over amid national economic
a meltdown in March 2013.
The minister had earlier said that the banking sector was crucial to the economic recovery, but that obstacles remained, such as the delay in the package of insolvency bills, linked to the other bill on foreclosures, which AKEL wanted its implementation delayed by six months and EDEK until January 1.
According to the budget, inflation should reach 0.9% in 2015 and will climb to 1.3% in 2016 and 1.5% in 2017. Unemployment is expected to peak at 17% in 2015 and fall to 15.8% the following year and to 14.4% in 2017.
The main sources of revenue are expected to be direct and indirect taxes, estimated at EUR 4.9 bln in 2015 or 83% of total revenues. The rest concerns sale of goods and services, as well as transfers, estimated at EUR 999 mln.
The government also hopes to generate fresh revenue streams from its privatisation roadmap that will see EUR 1.4 bln raised over the next four years from the sell-off of state assets, such as the telecom and electricity utilities, as well as the Ports Authority, that is expected to be the first to get underway by the end of 2015.
On the state budget’s expenditure side, payroll, pensions and bonuses continue to make up the lion’s share, but could be slightly less next year at EUR 2.5 bln compared to 2.58 bln in 2014.