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Posted on: July 19th, 2012 by AlYunaniya Staff No Comments

Greece: Coalition agrees no more cuts this year

Samaras ypoyrgiko

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After a meeting with Prime Minister Antonis Samaras, PASOK leader Evangelos Venizelos and Democratic Left leader Fotis Kouvelis stressed that the government would not impose any new spending cuts in 2012 beyond those already agreed. A new meeting will follow next week to finalise EUR 11.5 billion worth of austerity cuts demanded by the troika.

Finance Minister Yannis Stournaras briefed the three leaders on where the savings would be made. Sources told Kathimerini that about EUR 7.5 billion of the EUR 11.5 billion have been identified. After leaving the meeting, Stournaras said the leaders agreed on the cuts and talks would continue in order to pinpoint further savings. “We had a very good discussion,” he told reporters after the meeting, Reuters writes. “We agreed on the basic direction.”

Venizelos and Kouvelis made statements after their talks with Samaras and indicated that there that there had been broad agreement among the leaders.

According to protothema.gr, the final proposals of the Finance ministry indicate that it is difficult to achieve the target of EUR 11.6 billion of austerity measures for 2013-2015 without major horizontal cuts across all sectors, even in wages and pensions. Government sources suggested that implementation of measures should start from late 2012 to cover the discrepancies of this year’s budget too. In this case, the newspaper says, it will be the political leaders again who will be forced to impose additional costs that the relevant ministers did not propose voluntarily.

The heavy burden falls on the Emplyoment ministry, with cuts reaching EUR 4 billion: EUR 2 billion from cuts in social and welfare benefits; EUR 2 billion from cuts on double pensions, cap on pensions, 10-20% reduction in the lump sum.

The Administrative Reform ministry should save over EUR 2 billion that will come from: administrative structure reduction by 30% (elimination of administrations, sectors); wage cuts in SOEs by extending the Single Payroll; closure-merger of organizations (more than 250 in the first phase); implementation of the “1 hiring in 10 layoffs” rule; forced transfers

Government sources suggest that is necessary to cut 2.15 billion euros from Health and Education, at a time when the Health minister admitted that pharmaceutical expenditure is out of control.

New measures could save:

EUR 2 billion from cuts in pharmaceutical spending, merging of services, reduction of operating costs, mergers of hospitals; EUR 100-150 million worth of cuts per year in operating expenses, grants and mergers of Universities and Technological Institutions

The ministries of Defense and Interior submitted their proposals for cuts, whereby both should save EUR 1.4 billion of costs. Defense came up with EUR 800 million: EUR 680 million from cuts in armament programs; EUR 120 from equivalent measures to avoid cuts in officers’ payrolls. Interior needs to save EUR 600 million: reduction in grants; closure of organizations and local government agenices; increase in the fee for immigrants.

An additional EUR 2 billion is sought through several cuts, with a horizontal reduction of operating costs in all ministries.


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