Financial News: Gov't tables Medium-Term Fiscal Strategy Framework to generate 28.26 billion euros by 2015

The Greek government late Thursday tabled in parliament a Medium-Term Fiscal Strategy Framework for the economy envisaging a new round of severe austerity measures designed to bring in overall revenues of 28.259 billion euros by 2015, as well as a 50 billion euros privatisation program. The program will be put to vote in the 300-member unicameral parliament on June 28. Tax measures are expected to generate 6.537 billion euros by the end of the current year, of which 700 million euros will be from cutbacks in the national Public Investments Program.
The Medium-Term fiscal framework program was tabled in parliament late Thursday after its discussion and finalisation earlier in the day during a lengthy Cabinet meeting.
The planning includes an extraordinary "solidarity contribution" by all taxpayers above a specific amount of declared income, which is not included in the main body of the medium-term program but will be contained in legislation on implementation of the program after deliberation is held on the precise percentage of the contribution vis-a-vis income and the income threshold which, according to sources, is initially planned for annual incomes of over 8,000 euros, and on the duration of its application.
The Medium-Term program hopes to raise nearly 28.3 billion euros, distributed over 2011-2015. The measures plan to generate: 6.5 billion euros, or 23.1 percent of the overall amount, in 2011; 6.8 billion euros, or 24 percent, in 2012; 5.2 billion euros, or 18.5 percent, in 2013; 5.4 billion euros, or 19.3 percent, in 2014; and 4.3 billion euros, or 15.1 percent, in 2015.
According to the Medium-Term framework, the above will arise from: rationalisation of the salary expenditure (2.2 billion euros or 0.9 percent of GDP); reductions in operational expenditure (0.6 billion euros or 0.2 percent of GDP); abolitions and mergers of state agencies (0.8 billion euros or 0.3 percent of GDP); restructuring of the DEKO public utilities and organisations (1.3 billion euros or 0.6 percent of GDP); reduction of defence expenditures (0.6 billion euros or 0.2 percent of GDP); rationalisation of health spending (0.8 billion euros or 0.3 percent of GDP); rationalisation of medical/pharmaceutical expenditure (1 billion euros or 0.4 percent of GDP); reduction of social security expenditure and rationalisation of social spending (4.5 billion euros or 1.9 percent of GDP); improvement of social security organisations' revenues and clampdown on contribution-evasion (3 billion euros, or 1.3 percent of GDP); enhancement of tax compliance (3 billion euros or 1.2 percent of GDP); reduction in tax exemptions and increase in other tax revenues (6.1 billion euros or 2.7 percent of GDP); increase in local government revenues (1.4 billion euros or 0.6 percent of GDP); rationalisation of Public Investments Program (0.5 billion euros or 0.2 percent GDP); general measures (1.4 billion euros or 0.6 percent of GDP); and provisions (1.2 billion euros or 0.5 percent of GDP).
The measures for rationalisation of the salary expenditure are distributed as follows: 800 million euros in 2011, 660 million euros in 2012, 398 million euros in 2013, 246 million euros in 2014, and 71 million euros in 2015. They include limitation of public sector hiring to a ration of 1 hiring per 10 withdrawals this year and 1:5 in 2015; suspension of salary maturation raises; increase of working hours from 37.5 to 40 hours per week; reduction of expenditure for overtime, further reduction of remuneration for committees, reduction of number of contract employees (by 50 percent in 2011 and by 10 percent each over the following years of the program), and through the implementation of voluntary part-time employment in the public sector and unpaid leave.
The operational expenditure will be reduced through a 7 percent withholding in state operational spending, the implementation of an electronic procurements platform, and other steps.
The reduction of subsidies to agencies not designated as general government agencies concerns only 2011, and will save 291 million euros.
From the abolition and merger of state agencies, the state will save a further200 million euros this year, 89 million euros in 2012, 102 million euros in 2013, 70 million euros in 2014, and 19 million euros in 2015.
The restructuring of the so-called DEKO includes measures to boost the revenues of commuter services and other utilities and sate organisations, their restructuring, the sale of non-strategic activities, reduction of expenditure for personnel, cutback of the salary cost, sale of assets and reduction of operational expenses, and savings from abolitions and mergers.
The reduction in defence expenditure will arise from savings from the armaments program.
In the health sector, a special fee will be imposed on companies exempted from the non-smoking law (generating 40 million euros in 2011); increase in state hospitals' revenues through: a) special agreements for provision of services to private insurance companies, b) billing of foreign nationals (for care provided), and c) containment of services to the uninsured, while a new 'health charter' will be introduced, a central system of procurements will be created in the hospitals, and fixed prices will be set for medical services, while a National Primary Health Organisation will also be established.
For rationalisation of the medical/pharmaceutical expenditure, measures include expansion of the list of medicines not requiring prescription, a new pricing policy on medicines, and expansion of the electronic prescription system through checks on hand-written prescriptions.
As for the denationalisations and exploitation of state property program, the target is to generate 50 billion euros by 2015, of which 15 billion euros by the end of 2012.

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