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Greek 2016 Draft Budget Forsees GDP Contraction of 2.3 pct for this Year

The Greek Finance ministry tabled to Parliament the draft budget plan for 2016, on Monday, envisaging the government’s priorities for social justice and fiscal responsibility.
The draft budget plan foresees that the general government will present a primary deficit of 418 million euros, or 0.24 pct of GDP this year. This estimate was based on the implementation of structural reforms and institutional changes agreed upon with the creditors.
The ministry said that the government has made efforts to reform a fiscal area which was safeguarded after hard negotiations with the country’s creditors and noted that drafting of the 2016 budget was made amid adverse economic conditions and under political commitments made by the government in an agreement with its lenders.
The general government budget highlights a primary surplus of 894 million euros in 2016, or 0.5 pct of GDP, in line with an agreement signed with the Troika. The budget includes a series of interventions such as reforming the VAT code, changes in special solidarity contributions, raising advance payments of income tax for the self-employed, raising tax rates for rental income and expanding the Greek state’s participation to 30 pct of OPAP profits from video games.
The government secured additional funds for social protection and economic activity, such as raising a spending ceiling for state hospitals by around 150 million euros in 2015, 2016, and later. It also allowed for around 100 million euros in financial relief to the middle and working classes and an increase of 50 million euros to the Public Investment Program in order to boost employment and economic growth.
“We are certain that we will successfully deal with a difficult challenge of exiting the crisis and protecting, as we must, our fellow citizens with the greatest need,” the ministry said in the draft budget plan.
The 2016 draft budget plan also expects a GDP contraction by 2.3 pct this year and by 1.3 pct in 2016, with the country’s Gross Domestic Product falling to 173,365 billion euros next year. The unemployment rate is projected to rise to 25.8 pct of the workforce in 2016, from 25.4 pct this year and 24.6 pct in 2014.
Regular budget net revenues are expected to ease to 53,344 billion euros in 2016 from 53,480 billion this year, while spending is projected to ease slightly to 55,685 billion euros from 55,690 billion euros over the same periods, respectively. Public Investment Program’s spending is expected to rise to 6,750 billion euros in 2016 from 6.4 billion in 2015.
(source: ana-mpa)

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