Next minister has work cut out

The new minister of finance, expected to be appointed very soon, will find a study by the Center of Planning and Economic Research (KEPE) waiting on his desk with proposals for possible spending cuts totaling 11.5 billion euros for the 2013-14 period, as demanded by the country’s creditors.

KEPE estimates that 1 billion euros can be saved by setting a ceiling of 2,400 euros per month on the total pension payments (main and auxiliary) that each pensioner receives. Another 1.1 billion euros could come from cuts in the public sector’s operating and other expenses, and a further 1.2 billion from the central administration.

Further savings could be made through the more extensive use of generic drugs, while abolishing the positions of advisers to elected officials would reduce state spending by 130 million euros. Postponing the payment of a retrospective tranche to justice officials is seen saving some 280 million euros. A horizontal 10 percent cut to main pensions that exceed 1,500 euros per month would result in a benefit of 600 million euros for the budget.

The previous government headed by Lucas Papademos had asked KEPE to examine proposals for spending cuts for the next finance minister’s consideration. This will form part of the minister’s mammoth task for his or her first few days in the job, which will also include the drafting of the updated midterm program and a meeting with the representatives of Greece’s official creditors, known collectively as the troika.

The new midterm plan was supposed to be ready by the end of June, but this is clearly unfeasible after the back-to-back elections in the space of just a few weeks. It is therefore certain that the new government will ask for a deadline extension.

Ministry officials are optimistic that the troika will permit the new government to table the new midterm plan in October along with the 2013 budget, as besides the time required for a reliable fiscal plan to be drafted for the next three years, by October Athens will have probably learned whether it will get an extension to its deadline for reducing its deficit. The existing bailout agreement dictates that the deficit will have to go down to 3 percent of gross domestic product by end-2014 

Εγγραφείτε στο newsletter μας

Ενημερωθείτε πρώτοι για τα τελευταία νέα, αποκλειστικά ρεπορταζ και ειδήσεις απο όλο τον κόσμο