Retirement agreement – countermeasures with "sacrifice" RDP


She Dimitra Kadda

Countermeasures / benefits amounting to around EUR 900 million, compared to EUR 766 million provided for in the Preliminary Draft Budget, communicated yesterday's agreement to the Euroworking Group for Greece.

The gap between the Commission's estimates of lower growth and primary surplus and therefore fiscal space and government has been surpassed, according to information obtained mainly from a new cut (second in line) of the Public Investment Program. EUR 350-500 million, as well as other sources (with scenarios for lower reductions in young people's insurance contributions than originally estimated in the Preliminary Draft).

The exact values ​​and their allocation were not finalized. According to information, they will be subject to technical discussions by the Ministry of Finance and the European Commission in the coming days with the aim of being presented on November 21 through two texts:

· The final draft budget to be submitted by the Ministry of Finance to Parliament, but also
· The Commission's report on the Greek budget, to be published on the same day.

The package also includes non-cuts in pensions, which, according to early information on yesterday's agreement, will not include an "asterisk" in the postponement of the measure. It remains to be seen, of course, whether there will be other clauses on the future potential of divergences.

Redistribution of funds and dividends
In the area of ​​benefits / countermeasures in 2019, there will be, according to information, a significant redistribution of resources per share, with emphasis on those considered more developmental, such as housing assistance.

It can not be ruled out that the value of the total benefit package is marginally reformed, depending on government projections and institutions on the impact of the measures on growth and revenue.

In addition, the final draft budget may also reveal a first picture of the dividend margins for 2018 and the budget execution figures for 2018. They show that the primary surplus of the state budget for the 10-month period reached 6.5 billion of euros, generate expectations for the primary surplus throughout the year, even above 4.5% of GDP (ie around 2 billion euros above target), with obvious consequences for liquidity and the economy, the overcoming comes from over-taxation and informal payment stops

Reducing EDP
One of the government's "tools" to build superpowers is the under-execution of the Public Investment Program. Over the 10-month period, expenditure decreased by € 1.35 billion, ie the main source of surplus surplus. Last year, it closed about 1 billion below the target.

An extra 300 million euros (€ 7.3 billion) increase was announced, driven by the reduction of pensions. However, the project was projected at € 7 billion, as this € 300 million increase was not selected in Tsipra's countermeasures / benefits. A further reduction, second in line, was made in relation to the original forecasts.

It should be noted that an increase of the EDF is not currently included in the "benefits" of 2019 but, more generally, in the four-year plan announced in the TIF. Regarding the final result of PPI expenses for 2018, this will be demonstrated by the requests for payment that will be made until December 31 for the projects of the NSRF.

What the MINISTRY does – in the Eurogroup on 3 December, the political endorsement
According to sources at the Ministry of Finance, the decision of the Euroworking Group will be politically validated at the Eurogroup meeting of 3 December (as will be the case with all budgets of other Member States). Of course, it can not be ruled out, on the fringes of the Eurogroup, on Monday that the issue of deepening EMU, as well as the Italian budget, is a big thunder.

Ministers also said yesterday that "the Eurogroup Working Group (EWG), after examining Greece's contribution and positive appreciation Commission did not raise objections to the draft budget for 2019. ". Formally, no further clarification was given to the agreement.


Negotiation on the "mix" and value of countermeasures occurred on the basis of many alternative scenarios with the aim of qualifying / strengthening those with a greater development footprint. The reason why measures are considered to ensure the acceleration of growth of 2% in 2019 (in the cut-off scenario) to 2.3% in 2019.

The reduction of insurance contributions from autonomous, autonomous workers and farmers (reduction of the primary insurance rate by 1/3 and the application of the minimum income base for ancillary benefits and total sum) development, as well as the subsidy for young insurance contributions (for which the information refers to a possible reduction).

Particularly under development (due to the impact on domestic demand), the income subsidy was considered to be considerably strengthened (estimated at EUR 200 million in the preliminary draft). The Preliminary Draft also targets the recruitment of special education teachers and the average EN redução reduction of 10%.

Both tax measures (reduction of corporate income tax from 29% to 25% over four years and reduction of the tax on profits distributed by 5 percentage points) are considered developmentally. Their extra "trump" is that they have zero cost in 2019, as they will have tax returns for 2020.


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