Monday 16 October 2017

Greece's economy to contract for sixth year

Greek Finance Minister Yannis Stournaras talks to reporters after a meeting with Greek Prime Minister Antonis Samaras and the troika in Athens yesterday. 'The troika wants clarifications,' Mr Stournaras told reporters
Greek Finance Minister Yannis Stournaras talks to reporters after a meeting with Greek Prime Minister Antonis Samaras and the troika in Athens yesterday. 'The troika wants clarifications,' Mr Stournaras told reporters

Marcus Bensasson and Maria Petrakis

Greece's economy will contract for a sixth year in 2013 as the government prepares further cuts to pensions, wages and social benefits to meet the terms of its bailout packages.

Greece's international lenders have demanded details on Athens's proposals in an austerity package worth nearly €12bn, Yannis Stournaras -- the Greek finance minister -- said.

"There are discussions on the measures. The troika wants clarifications," Mr Stournaras told reporters after the latest round of talks between the government and its European Union and IMF lenders.

Greece's draft budget submitted to parliament yesterday shows the country is set for a sixth year of recession, with its economy predicted to contract by 3.8pc in 2013.

Stabilising

This compares with a prediction in Greece's March rescue agreement with the EU and the IMF that the economy would contract 4.8pc this year before stabilising in 2013.

This year's recession is expected to see the economy shrink around 6.5pc, the document said. Unemployment is predicted to rise to 24.7pc in 2013 from an average 23.5pc.

The budget sees Greece's government still running at a loss despite waves of spending cuts and tax hikes over the past two years.

The budget follows months of haggling between Prime Minister Antonis Samaras and the leaders of the two parties supporting his coalition government over €13.5bn of austerity measures for the next two years. The measures will help reduce the deficit to 4.2pc of GDP in 2013 from 6.6pc this year.

Agreement with the troika on the measures -- comprising an extra €3bn in revenue with spending cuts amounting to €10.5bn -- is imperative to allow the release of €31bn under the country's bailouts. That payment is designed primarily to recapitalise the nation's banks in a bid to boost liquidity.

Without the additional measures the shortfall would have bounced back to 7.1pc of GDP, the document today showed. Greece will show a primary surplus next year of 1.1pc of GDP, or €2.2bn, from a deficit this year of €2.8bn.

The latest measures, worth €7.8bn, include raising the retirement age to 67 from 65, cuts to wages, pensions and benefits, as well as health, defence and education.

The general government deficit for next year will narrow to €8bn from €13.2bn this year, according to the draft budget. General government debt will reach 179.3pc of GDP next year, or €346bn, from 169.5pc this year, or €340.6bn, the budget forecasts.

The central government deficit will be €11.6bn next year, down from €15.4bn in 2012, the forecasts indicate. Ordinary government revenue is forecast at €51.8bn in 2013 from €53.7bn this year, while ordinary government spending next year will be €56.6bn.

Greece's coalition government has requested more time to spread out the budget measures to 2016, which would require additional funding and the approval of the EU and the IMF.

The IMF has indicated that any additional financing will have to come from Europe, where officials have told Mr Samaras no discussion can be held on an extension until he honours pledges made for the country's rescue package.

Greek Finance Minister Yannis Stournaras talks to reporters after a meeting with Greek Prime Minister Antonis Samaras and the troika in Athens yesterday. "The troika wants clarifications," Mr Stournaras told reporters. REUTERS /Yorgos Karahalis

Irish Independent

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