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Greeks Expected to Pay Additional €4.35 Billion in 2016 Budget

Greek Finance MinistryThe 2016 state budget that was tabled in parliament on Monday includes new measures that demand an additional 4.35 billion euros from cash-strapped Greeks.
New taxes and contributions and pension cuts for 2015 and 2016 total 6.4 billion euros. More specifically, 1.8 billion euros will be spending cuts in pensions, social security and benefits. Additional taxes amount to 2.49 billion euros for the same period.
State spending will be reduced in 2016 compared to 2015. More specifically:
The total amount allocated for salaries and pensions is 18.5 billion euros, compared to 18.8 billion spent in 2015.                                                                                               Insurance, health care and social welfare spending will be 13.8 billion euros while in 2015   total spending amounted to 14.5billion.                                                                     Government operating spending will drop to 5.1 billion euros in 2016, compared to 5.5 billion this year.                                                                                                                     Reserves: It is required that the reserves will be 1 billion euros in 2016. The same amount was required for 2015 but it is estimated to be 302 million by the end of the year, as 700 million euros went to state hospital needs and supplementary funds for low pensions.
Tax reforms include changes to the value added tax code and rates of solidarity contribution, raises in corporate income tax and freelancers, income tax raises and raises to revenues received from rentals, and the expansion of state participation to 30 percent of profits from OPAP gaming machines.
The draft budget foresees contraction of 2.3 percent of GDP in 2015 and a 1.3 percent drop for GDP in 2016. These figures are expected to be revised for the better in the November assessment.
The key points of the draft are:
Recession at 2.3 percent in 2015 and 1.3 percent in 2016
Primary deficit of 0.24 percent in 2015 instead of forecasting 0.25 percent
Primary surplus of 0.52 percent in 2016 instead of forecasting 0.50 percent
Revenues: +1.4 billion euros in 2016 (mainly from taxes)
Public employee salaries and pensions: -250 mil euros
Security, health care: -700 million euros
There is no provision for repayment of arrears to private suppliers and service providers
It is estimated that state debt will be 198 percent of GDP in 2016, while it is 187.6 percent this year.

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