Fis­cal al­ter­na­tives of 500 mln sought to plug pay rul­ing hole

Kathimerini English - - Front Page - BY SOTIRIS NIKAS

The Fi­nance Min­istryis seek­ing per­ma­nent mea­sures to the tune of 500 mil­lion eu­ros ahead of a for­mal verdict from the Coun­cil of State on the wage cuts im­posed on mem­bers of the armed forces and emer­gency ser­vices. The coun­try’s high­est ad­min­is­tra­tive court has re­port­edly deemed the wage cuts un­con­sti­tu­tional.

Even though the de­ci­sion will not be for­mally is­sued for at least a few weeks, the coun­try’s cred­i­tors have al­ready sent an e-mail to the min­istry ask­ing for de­tails on the is­sue and on the gov­ern­ment’s in­ten­tions re­gard­ing the short­fall that any com­pen­sa­tion will cre­ate.

For now the min­istry has not said any­thing for­mally about how that pos­si­ble gap in the stream­lin­ing pro­gram could be cov­ered, cit­ing the lack of a for­mal verdict. How­ever there is very lit­tle room for ma­neu­ver and the amount of 500 mil­lion eu­ros could come from the im­po­si­tion of a new tax or a cut to salaries or pen­sions, while a se­nior min­istry of­fi­cial said the im­pact of the verdict may in fact ex­ceed 500 mil­lion eu­ros.

That only con­cerns the armed forces and emer­gency ser­vices,

seek­ing mea­sures worth 500 mil­lion eu­ros ahead of the Coun­cil of State’s verdict that is set to deem un­con­sti­tu­tional the wage cuts im­posed on mem­bers of the armed forces and emer­gency ser­vices. with the min­istry cal­cu­lat­ing that another 200 mil­lion will be needed to cover the cuts suf­fered by judges, which were in­tro­duced with the same law. Of­fi­cials are now tak­ing it for granted that if other spe­cial wage cat­e­gories re­sort to jus­tice over cuts stemming from the same law, they may well se­cure a verdict in their fa­vor too, which could in­crease the fis­cal short­fall to over 1 bil­lion eu­ros.

In any case, the is­sue con­sti­tutes yet another stick­ing point in the gov­ern­ment’s talks with its in­ter­na­tional cred­i­tors, with the lat­ter hav­ing al­ready es­ti­mated 2014’s fis­cal gap at 1-1.5 bil­lion eu­ros while the Greek side is propos­ing mea­sures to­tal­ing 1.2 bil­lion to cover the short­fall.

The Fi­nance Min­istry’s aim is to plug that hole with­out im­pos­ing any harsh mea­sures in the form of salary or pen­sion cuts or new taxes, but that will most likely fail if the need to cover the wage cuts an­nulled by the Coun­cil of State is added to the fis­cal gap, even if the de­ci­sion’s im­pact is no more than 500 mil­lion eu­ros. That in turn is cer­tain to have a po­lit­i­cal im­pact that the gov­ern­ment will have to face at a time when its par­lia­men­tary ma­jor­ity has been sig­nif­i­cantly re­duced.

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