Greece: EUR 5 billion the fiscal gap for 2015

Greece: EUR 5 billion the fiscal gap for 2015

Athens, February 13, 2015/ Independent Balkan News Agency

By Spiros Sideris

At EUR 4-5 billion the technocrats of Europe estimate now the budget gap in 2015, with the situation worsening with every passing day. The dramatic appeal of Deputy Finance Minister, Nadia Valavani for payment of taxes by all who owe (ENFIA, VAT and inclusion in the regulation of 100 doses) highlights the problem of the shortfall in revenue from the beginning of the year, and that the problem with the revenue widens the “hole” which was already present in the budgeted.

Whereas Greece should achieve this year a primary surplus of 3% of the GDP, the Troika estimated that there is a gap of about EUR 3 billion. With the measures were proposed by the previous government, the gap was down to EUR 1.7 billion, but since the new government has made it clear that it will not implement them, the assessment is back at EUR 3 bn.

This amount is in addition to the poor revenue performance in the first month of the year. Conservative estimates place the shortfall at around EUR 1 billion, bringing in the beginning of 2015 the fiscal gap to EUR 4 billion. Eurozone officials consider that even if the shortfall in revenue is contained, the budget gap could rise to the level of EUR 5bn, if the new government proceeded to with the implementation of the measures it has announced.

Deputy Minister of Finance, D. Mardas, said that the General Accounting Office (GAO) has asked all ministries to submit the measures they intend to apply so that the services of GAO to make a cost analysis. According to him, most ministries have already done so and the cost “is not huge”. Indeed, he noted that the policy to be applied will be “spread” in a depth for 4 years, implying that the cost will be distributed to the budgets of all the years and not only in this year.

The government also seeks in the negotiations with Europe to change its financial targets. Specifically, the Finance Ministry said that the target for primary surplus of 3% of the GDP will change and Athens would commit to a primary surplus of 1.5% of the GDP. If the target shrinks for the primary surplus at these levels, then it will be about EUR 3bn less than anticipated and hence the fiscal gap will be correspondingly smaller.

That is why Mardas said that the fiscal policy to be followed, the measures implemented by the government and how to implement them will depend on the agreement that Greece will achieve in the negotiations with Europe on the change of objectives. However, in any case he made it clear that there will be changes in the budget of 2015, which either will be reflected in a supplementary budget, or through the updating of the Med-Term Plan.

As regards with the public debt, Mardas clarified that whether it is at 175% of the GDP, or at 185% of the GDP, or at 205% of the GDP, the bottom line is that it is not sustainable in regard to the size of the GDP and the strength of the economy. Indeed, when asked if the goal for growth of 2.9% this year will be reached, he appeared skeptical.